It’s a good sign that the new financial services regulator (the FCA) intends to stick to its ‘consumer first’ promise with the flurry of warnings in the past week about unauthorised financial services firms
Sadly there are plenty of unauthorised firms that are running scams, with many from overseas companies specifically targeting UK consumers.
The important thing to remember is that if you deal with an unauthorised firm – whether they are running a scam or not – you will not be covered by the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) if things go wrong.
However, there are plenty of steps you can take to protect yourself from fraud and unauthorised activity. The FCA offers the following tips:
Step 1: Check the Register
It strongly advises you to only deal with financial services firms that are authorised or registered. You can check the FCA Register to ensure they are, and it also has further information about firms and individuals regulated by them. Our authorisation number is 401283.
If a firm does not appear on the Register but claims it does, contact the Consumer Helpline on 0800 111 6768.
Step 2: Ring them back
To confirm the identity of an authorised firm on the Register, ask for their ‘firm reference number’ (FRN) and contact details, but always call them back on the switchboard number given on the Register rather than a direct line they might give you.
Step 3: Use the right website
You should access the Register from- http://www.fca.org.uk/ – rather than through links in emails or on the website of a firm offering you an investment.
Also check the address of the website is correct and there are not subtle changes that mean it is a fake.
Step 4: Beware of cloned firms
You should also beware of fraudsters pretending to be from a firm authorised by the FCA, as it could be what is known as a ‘cloned firm’.
These scammers often claim to be from overseas firms that appear on the Register, as these firms do not always have their full contact and website details listed.
Step 5: Make additional checks
With fraudsters adapting their tactics you should make additional checks to confirm you are dealing with the financial services firm in question and have the correct contact details – especially if they made the first contact with you.
You might want to check the details on the firm’s website, with directory enquiries or Companies House.
Step 6: Check if a firm is authorised or registered
Almost all financial services firms and individuals must be authorised by the regulator.
But certain types of firms may instead be registered, including some payment services providers and electronic money (e-money) institutions, mutual societies like credit unions, friendly societies, cooperative societies, working men’s clubs and building societies.
You can check the Register to see whether a firm is authorised or registered.
Beware that registered firms do not have to provide the FCA with as much detail about their business or safeguard the money received from customers for payment services, and the regulator has less power to check on the firm.
Step 7: Search the list of unauthorised firms
You can look through the list of unauthorised firms to avoid doing business with, although their names are likely to change regularly.
This is a list of firms and individuals that are currently targeting UK investors and the FCA has received complaints about.
The regulator adds new names to this list as soon as possible, but if the firm which has approached you does not appear on the list, do not assume it is legitimate – it may not have been reported yet.
Step 8: See warnings from abroad
If you are dealing with an overseas firm or scheme you should check how it is regulated and follow similar steps to these.
The FCA has some warnings from foreign regulators about firms conducting unauthorised business.
Step 9: Avoid unwanted sales calls
Keep in mind that authorised firms that you have no relationship with are highly unlikely to contact you out of the blue.
You can reduce the number of unsolicited mailings and cold calls you receive by registering with the Telephone Preference Service and Mailing Preference Service.
Step 10: Report an unauthorised firm
If you think you have been approached by an unauthorised firm you should contact the Consumer Helpline on 0800 111 6768.