Changes in the Financial Regulations to tackle Fraudsters and Scammers
The Financial Conduct Authority (FCA) has revealed the latest figures on the level of investment scams in the UK in 2018. The report draws on nearly 7,000 reports during 2018 together with information from Action Fraud. The report shows that people in the UK lost over £197 million in fraudulent investment scams in 2018. The most commonly reported scams are in Forex, followed by crypto-currency as well as the shares and bond sectors connected to firms that are not regulated or authorised by the FCA. These sectors alone are responsible for 85% of all suspected investment scams in 2018. The Director of Action Fraud, Pauline Smith, was quoted in Finance Magnates, a financial publication “These statistics show that investment fraud is a major threat, with fraudsters doing everything they can to manipulate potential victims into making investments. Victims are often coerced or persuaded into parting with significant amounts of money and this can have a devastating impact on their wellbeing and finances.” Pauline Smith further commented: “we are working with the FCA to raise awareness of investment fraud and would urge anyone who is considering in investing to check with the FCA before parting with their money.”
It will be no surprise that the fraudulent brokers that operate the scams are fast on their feet and change their tactics to deceive unwary investors to match the Authorities’ efforts to stop them in their tracks. Financial fraud is a worldwide problem and the fraudsters invariably set up their operations in parts of the world with weak financial regulation, designed to make it as difficult as possible for their victims to be compensated or for them to be prosecuted.
In the UK there are very clear rules for investment brokers to follow including the fact that novice investors with little or no knowledge of the markets must not be led into schemes they do not understand and must not be encouraged to take significant risks.
The UK Authorities are trying to protect individuals from fraud and have moved the responsibility for regulation of binary options, which depends on guessing just whether the market will rise or fall, from the Gambling Commission, whose hands were tied to some degree as far as the scams involving binary options were concerned, to the FCA and since 3 January 2018 UK firms offering binary options must be authorised by the FCA, resulting in:
- Firms dealing in binary options are now authorised and supervised by the Financial Conduct Authority
- Binary options will be subject to the same regulatory regime as for investment products
- Individual complaints can be referred to the Financial Ombudsman Service
- Eligible consumers will have access to the Financial Services Compensation Scheme
Giambrone’s banking and finance team employ various tactics and strategies for restoring the money lost by our clients to fraudulent brokers. Tracking the convoluted route that the scammers invariably take to hide themselves and the money that they have stolen is time-consuming and sometimes thankless. Most fraudulent brokers operate on a hit and run model and will try to make as much as they can as quickly as they can before they disappear before they can be caught.
However, the Giambrone team has considerable success in retrieving money for our clients. They can and do leverage their years of experience to oblige facilitators (albeit unwitting) of the fraud to compensate our clients when sloppy due diligence has made it easy for the fraudsters. However, this can be slow and organisations such as banks can only act once due process has taken place, such as a court order to enable them to act legitimately within the law.
For further information as to how to retrieve money lost to scammers please click here