City watchdog the Financial Conduct Authority attacks online fraud

The City regulator has lashed out at the ‘scourge’ of online investment fraud which is causing untold damage to Britain’s savers and the legitimate businesses trying to serve them.

Mark Steward, an executive director at the Financial Conduct Authority (FCA), said the watchdog has already issued 632 specific warnings about scam firms this year – more than double the number in the same period in 2020.

Over the whole of last year, it issued 1,204 warnings, double the number in 2019. The increase is costing Britons millions of pounds every year – a crisis which has been highlighted by the Mail’s Stamp Out Investment Fraud campaign.

Web of deceit: The increase in online fraud is costing Britons millions of pounds every year – a crisis which has been highlighted by the Mail’s Stamp Out Investment Fraud campaign

This paper is urging the Government to include such financial swindles in the Online Safety Bill, forcing web giants operating in the UK to check whether the advertisements and websites that they host are legitimate.

Addressing industry bosses at the FCA Investigations & Enforcement Summit, Steward referred to a Money Mail probe which proved just how easy it is for fraudsters to run a scam advert which sucks in thousands of savers. 

He said: ‘This advertisement was typical of the kind of investment scams we have seen increase over the last year. The increase has become a scourge.’

Steward added that it posed a ‘threat to a legitimate financial services industry’. 

Some of the biggest household names in finance have repeatedly had their websites ‘cloned’ in recent years, with con artists copying the site and branding of a legitimate company such as Quilter or Aviva, and tricking savers into trusting them and giving away money.

Not only is this leaving elderly investors bereft of their life savings, it is ‘damaging trust in the whole system’, and causing wary Britons to miss out on valuable returns, says Quilter’s chief risk officer Matt Burton.

Speaking of the pressure put on his staff as they tried to help distraught victims, he said: ‘We have seen some pretty tragic cases of people who think they are our clients.

‘They call us up and say they bought an investment bond, but they haven’t heard anything for a while. It turns out they have become a victim of a scam.

‘We are spending a huge amount of time on helping victims. Some of the sums involved are really significant. It can be people’s pension pots that they have saved for their whole lives.

‘It does dent confidence in the system. Once someone has lost £2,000 are they likely to go back and invest again? They will probably just sit on their cash.

‘The success of scams is going to turn people off investing, and that will be damaging as they enter retirement and realise they don’t have enough money.’

Mark Steward, an executive director at the FCA, said the watchdog has issued 632 warnings about scam firms this year – more than double the number in the same period in 2020

Paul Pisano, UK financial crime risk director at Aviva, added: ‘Once we’re notified of fake websites which dishonestly use Aviva’s brand name, we do everything within our power to have these types of websites taken down. Unfortunately, as soon as one is taken down, a new one inevitably pops up.

‘The challenge we face is that these frauds take place outside of our control environment. We are dependent on the content providers, the online platforms and the authorities to remove the websites or get the offender to stop the activity.’

Both Quilter and Aviva are backing the Mail’s campaign.

Burton said: ‘The case for including financial harms [in the Online Safety Bill] is so clear. Why would you let this opportunity pass us by?

‘If you miss this opportunity, my worry is it gets kicked into the long grass and nothing happens for five years.’ After Money Mail highlighted how long it took the FCA to remove a scam advert from Google, Steward has promised action.

He said the FCA had developed a ‘dragnet approach’ which monitors the internet, and allows the watchdog to issue warnings about a scam within 24 hours of it appearing.

But even the regulator is urging the Government to include financial harm in the Online Safety Bill, saying more must be done.

Currently, the FCA’s warning list can be found on its website but it is only useful for consumers who know where to check.

A recent survey from consumer rights group Which? found that 29 per cent of consumers had never heard of the list, and only 37 per cent were confident using it.

Rocio Concha, director of policy and advocacy at Which?, said: ‘Action from the regulator does not tackle the bigger problem of online platforms failing to do enough to stop adverts that lead to scams from appearing in the first place.

‘The Government has recognised that the major online platforms we interact with every day have a responsibility to protect users from scams.

‘The Bill must give them a legal responsibility to prevent, identify and remove fake and fraudulent content on their sites, including the vast number of adverts and websites posted by fraudsters.’