Financial investment fraud cases jumped 74 per cent in 2018
Reported fraud cases related to financial investments rose 74 per cent to 6,890 last year, up from 3,950 in 2017.
The most commonly reported cases were related to share and bond sales which saw an increase to 860 last year, up from 200 in 2017, and pyramid or Ponzi schemes, which saw an increase to 380, up from 50, over the same period.
The sharp rise in cases comes as investors look for higher yields in an era of low interest rates.
This has led some investors exposed to the sale of unregulated products, which are often aggressively marketed online and via social media.
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Data from the Financial Conduct Authority (FCA) shows it intervened 225 times in 2018 to tell firms to withdraw or change advertising.
The FCA warned mini-bond firm London Capital & Finance to change its advertising in December, shortly before it collapsed in January leaving over 11,500 retail investors owed more than £237m.
Alan Sheeley, partner at law firm Pinsent Masons, said: “Fraudsters are taking advantage of investors’ need for income.
“Suppressed interest rates on mainstream savings products have driven retail investors towards higher yielding, more lightly regulated investments. Combined with the ease for companies of reaching the mass market through online advertising, this has added a new layer of risk for retail investors.”
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“The UK benefits from an open investment market but high incidences of reported fraud shows there are cracks in the structure.”
The FCA said that more than £197m was lost to investment scams last year, with an incresing number of victims approached online.