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How Do You Avoid Financial Scams ?

Avoiding Financial Scams is easier than you think. Here is my five minute read.

Not so long ago, before money was invented as a tool I am sure there were cases of people being defrauded out of something they owned.

Since money? Well financial fraud has a long history. Early Greek times, back before modern Christian history fraud and theft was ongoing. 

It has always been that case less scrupulous members of society would take advantage of others, so society introduced rules and regulations in order to make it safer for all of us. 

Moving on to late 20th century the scams and fraud still goes on. This time with a bit more complexity than before, but using the same principles. Praying on the lack of consumer knowledge in a particular area. For us humans, money management is not something we have really learnt how to do – it’s only really since the 1960’s that managing our own money has been a thing.

The bad guys know this. 

It does get worse. The larger your investment pot the more the bad guys chase you down, to make an offer. To give ‘wise investors like you that opportunity to access something really special – something not available to the rest of the market, and provide a return that is, basically better than others are getting’.

And this is where all modern investment scams start. 

From Regulated People. 

  • British Steel Pensioners lost money by moving their pensions to ‘safer providers’.
  • Thirty years before it was council workers and nurses.
  • Endowment mis-selling.
  • Payment Protection Insurance.

These happened in my working lifetime.  And these are the reasons many parts of the ‘financial services industry’ deserves the bad rap that it gets. Sure, there are plenty of good people, but if yours gets paid by selling product then it is probably not the best adviser you could find.

In recent years we have seen a good number of scams collapse. Blackmore was big one, London and Capital, on the pensions side we had ARK in 2010. Basically these are have been going for a long while and people were surprised when they collapsed. Myself and several others were not.

You have to make an assumption  to TNO  – Trust No One when it comes to investing your money. 

For deposit investments – always refer to the likes of Moneyfacts.co.uk 

For others, pension or investment matters, ask around, get in touch with me. Speak to handful of people, look in the Trade press, see what providers are being mentioned. 

Take your time.

Collate as much information as you think you’ll need. Look at ‘reputable’ best buy lists. Start with the likes of Boring Money (there are others). 

Apply some logic. If interest rates are 3% and the scheme you are looking at is offering 5%  or more, ask why is that. 

Ask if you can speak to others who have invested, take to Twitter or other socials. Ask, see what others say, check and corroborate that information. 

Remember, it is your money. You are entitled to take as much time as you want. Anyone applying ‘buy now’ pressure is to be viewed as suspect. 

Don’t put all your eggs in one basket. First rule of investment planning. 

Pensions are sometimes not easy to do so be prepared for a bit more due diligence with those. 

Assume that anything found from an online search is going to be a scam.

Always check with the regulator to make sure it’s a bonafide firm.  Ask around to see if other people you know have used them (not always safe but worth starting there). 

Really take as much time as you need. If you are not sure, there are handful of Twitter people that will help @Moneytrainers  @ANGIEBROOKS11 @MarkTaber_FII  just ask the question about firm x or y. You won’t get a recommendation, but you will get a response to see if they think it is a scam.  You can also check MoneySavingExpert etc.

But don’t think you are alone, don’t think you need to make decision today or invest because something is pressing. You can’t make a financial decision without all of the information, you can’t make an investment decision without knowing all of the facts. 

Most of the scams shown above were on the radar of use in the know long before regulators were aware – and little was done. But this is the failure of regulation over recent years. 

Please remember. If it looks like a scam, feels like a scam and you are being pressured to invest, the fatal words I have heard time and time again  “I trusted my adviser” this is the fatal flaw in every failed investment.  TNO.

When you are ready for some more on this. Perhaps a workshop at your place of work, get in touch. 

Selection of Linked Content below.

https://www.financial-ombudsman.org.uk/news-events/consumers-warned-about-rise-in-investment-scams

https://committees.parliament.uk/committee/127/public-accounts-committee/news/172250/financial-conduct-authority-failed-to-protect-british-steel-pension-scheme-members-causing-serious-financial-harm/

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/pensions-and-annuities/transfers-from-defined-benefit-scheme-pensions-review

https://www.bbc.co.uk/news/business-20858236

https://www.financial-ombudsman.org.uk/consumers/complaints-can-help/ppi

https://commonslibrary.parliament.uk/research-briefings/cbp-9272/

https://www.nationalcrimeagency.gov.uk/news/over-78-million-stolen-in-clone-firm-investment-scams