Warning: crooks flatter to deceive

Financial regulator urges over-55s not to fall for tricks of investment fraudsters

People aged over 55 are being warned not to let investment fraudsters flatter them into parting with their cash, with the average victim of the scam losing more than £30,000.

Less than half (42%) of people in this age group are confident they know how to spot a fraudulent investment opportunity, according to a survey from the Financial Conduct Authority (FCA).

The regulator is warning consumers to be “sceptical and cautious” before investing their money, and that fraudsters will often use psychological games to trap victims, such as flattery or forcing someone to make a quick decision on a “special deal”.

It warned that if someone invests their cash with an unauthorised firm, they will have no protection from the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS).

These bodies help consumers to get their money back if something goes wrong. Last year victims of investment fraud lost £32,000 on average.

The FCA said flattery is a common tactic used to swindle people in investment scams.

Fraudsters may also pressurise potential investors to make a quick decision on a “limited time” investment offer.

The research found that more than half (53%) of over-55s surveyed believed acting quickly can be key to getting a good deal, suggesting that many people could be vulnerable to this tactic.

A third (34%) said it is best not to discuss investment decisions with others and fewer than half (48%) said they would be likely to seek impartial advice before making an investment.

The FCA said fraudsters will take advantage of such behaviour, as they often urge their targets to keep the offer secret, to stop others talking them out of investing.

The pension freedoms introduced in 2015, which give over-55s more choice over how they use their pension pots, could be seen as an extra opportunity by fraudsters to target people.

Director of enforcement at the FCA, Mark Steward, said: “Be alert to the warning signs, like being contacted out of the blue, promises of low risk and/or guaranteed above market returns, special deals just for you, time pressure and, very often, flattery.”

The FCA runs a campaign called ScamSmart, which alerts people to the dangers of scams.

More than 1,000 people responded to the FCA survey.