Investors beware: clever cons cost £197m last year

Thousands of victims of investment scams lost an average of £29,000 each last year – a total of £197m – as the City watchdog dedicated just 10 staff to fight con artists stealing pensioners’ life savings.

Fake tales of high returns involving shares, bonds, foreign exchange and cryptocurrencies were the most common scams reported to Action Fraud, accounting for 85pc of all suspected investment cons in 2018.

The Financial Conduct Authority (FCA) warned investors to be particularly vigilant during the first quarter of the year, peak investment season, as many look to invest before the tax year ends in April.

Investors cannot rely on the authorities to stop scammers before they contact potential victims. This week, the FCA revealed it has a team of just 10 people, out of a staff of 3,700, tasked with preventing and shutting down pension scams.

Pensioners lost an average of £91,000 each to cons in 2017, some their entire £1m pots. Many scams involve getting pensioners to put their nest eggs into share schemes, creating a crossover with investment scams.

Tim Bennett, of Killik & Co, a financial adviser, criticised the FCA for being “well behind the curve” on protecting consumers from scams.

Fraudsters are abandoning cold calls – banned since January if specifically about your pension, though not for investments – in favour of online tricks. They contact people through emails, professional-looking websites and social media channels.

Last year, 54pc of consumers who used the FCA’s warning list to find out whether they were dealing with a real firm had been contacted via online sources, up from 45pc in 2017.

Mr Bennett said: “Cold-tweeting, cold-posting and cold-messaging, the whole social media sphere, is largely below the FCA’s radar.”

He said this puts the onus on consumers to be wary: “Never respond to contact from an unknown source, or give personal details online unless you are 100pc sure about the recipient.”