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FCA and FSCS: “Investors should do more due diligence”

FCA and FSCS call for investors to conduct more due diligence to protect themselves against crooks and online scammers…

A survey by the Financial Services Compensation Scheme (FSCS) and Financial Conduct Authority (FCA) found that many investors avoid doing due diligence because they found the process “complicated” and “time consuming.”

According to the results of the study, 42% of Britons aged 18 to 24, who have money in investments, claim their latest investment was made while:

  • At the pub
  • Sitting in bed
  • Watching TV
  • Coming back from a night out

At I&L, we always emphasise that investors conduct proper due diligence. Making investments while inebriated at the pub is something we’d definitely not recommend.

We’ve previously delved into what types of investment scams to look out for. But a popular way of pushing people into investing online is a “good deal” with a limited time frame.

Investors avoid due diligence

It’s become dangerously easy to invest in a scam simply by clicking a button on your smart phone.

When asked which tasks they spent most time on, consumers said:

  1. Choosing a holiday
  2. Laundry
  3. Buying a car
  4. Checking social media

Investors prioritised all of these matters over due diligence.

FSCS spokesperson Lila Pleban said: “With almost two in five adults holding investments in the UK, there’s clearly a growing appetite to start investing as online platforms are making it easy and accessible for everyone.

But as our findings show, carving out time to research and look into investment opportunities is not always top of people’s to-do lists and unfortunately, which puts them at a higher risk of being scammed or putting their money with an unprotected platform or provider.”

Investment tips and advice

As a reminder, here are a few basic due diligence tips on how to protect yourself against online scams:

  1. Familiarise yourself with warning signs such as unsolicited contact, pressure to decide within a set time, and unrealistically high returns
  2. Check the FCA Warning List, which tells you if the firm you’re dealing with is operating without FCA authorisation.
  3. Be wary of unregulated investments. It’s always safer to go with regulated investments, especially if you’re investing your pension or life savings
  4. Confirm that your investment is eligible for FSCS protection with the new Investment Protection Checker

Just a basic amount of due diligence can make a huge difference. Think about the amount of wasted moments people spend scrolling on social media. We could avoid much heartache by spending a fraction of that time doing due diligence on investment prospects.

Scam Alert

This message serves as a warning against potential online scams, including website scams and investment scams. Please exercise caution and conduct thorough research before engaging in any online transactions or investments. Protect your personal and financial information from fraudulent activities, and consult with trusted sources for advice.

Insolvency and Law Peter Murray is an award-winning consultancy firm specialising in Insolvency, debt purchasing and business rescue.

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