Investors have been ‘preyed upon’

several campaigns to alert consumers to the danger.

But even investors who do check with the regulator are often left none the wiser as to a firm’s status. Telegraph Money has repeatedly uncovered errors with the FCA’s register, which savers are advised to check before they deal with financial firms.

Mark Taber, a bond analyst, said the language was not consumer friendly, so it was hard to tell what aspects of a firm had been approved by the watchdog. As recently as April, the FCA’s website incorrectly advised consumers that all bonds were under its regulation. “The current situation is ridiculous,” Mr Taber said. “It is virtually impossible for consumers to unravel the confusion.”

Mr Townsend added that he was currently dealing with a complaint over an investment where “FCA staff gave contradictory information about whether or not it was regulated”.

The FCA said it was spending £5m to revamp the register, although it is unclear how this money will be used.

Earlier this summer the watchdog’s own report conceded many customers were confused about what level of supervision the FCA had over firms.

Yesterday the Treasury Committee group of MPs intervened, calling for the introduction of a formal structure that allows the FCA to ask for its scope to be extended. It warned that the current system allowed consumers to be “preyed upon” as the difference between regulated and non-regulated activities was unclear.

Baroness Altmann added: “The regulator seems to assume all customers understand the rules, but in reality they don’t. It is high time it paid closer attention to the needs of customers, rather than making complex rules that confuse them.”