Financial Scams

Financial scams and financial fraud have probably been around for as long as we can remember and, in fact the first financial fraud can be traced back to 300BC Greece. It involved a plan to sink an empty boat, sell the corn (that the loan/insurance would think was lost in the empty boat) and keep the loan (insurance) money. The plan failed and the perpetrator drowned.

Financial scams have come a long way since then. With scammers becoming more sophisticated and the scams more convincing. Attempted Financial Scams are an every day occurrence.

Top 5 Financial Scams

According to the Financial Services Compensation Scheme (FSCS) the top 5 financial scams are:

1 .Boiler Room Schemes

These are often calls out of the blue to invest in a scheme offering impressive returns or with the promise of a guarantee. There is usually time pressure to act quickly or miss the opportunity to invest.  You may be asked to keep the call confidential and be told you are receiving insider knowledge. In reality, they are selling worthless or over priced investments.

One example of this was a scam that ran between 2010 and 2014 where members of the public invested into a company that owned land in Madeira. They were told the value of the land would increase by 228% but no money was ever paid out and 170 people lost their investments. 

What to do

If it sounds too good to be true, it probably is. 

If in doubt, check the Financial Conduct Authority Register to check the authenticity of the company. You can check the FCA register here.

Seek independent advice

Do not be pressured into acting and make 100% sure the investment is genuine.

2. Phishing Scams and smishing scams

Phising scams are sent via email and smishing sent by text. These are now the most common form of scams. I am sure we have all had emails and texts from fraudsters who pretend to be an official organisation such as your bank. They contain a link that you are asked to click on to verify your details. Once you do so, the fraudsters have access to your account and steal your money.

A recent example of this is a text from the Royal Mail saying they are holding a parcel for you as there is unpaid postage and another from HSBC and other banks saying a payee has been set up and if it was not you to click on the link.

What to do

Stop and think. Do you have dealings with the company, have they contacted you in this manner before. If no, do not click on the link.

If you receive an email, check the email address from where it came. Does it look genuine?

Remember, your bank will not ask you to reveal your account details or password.

If in doubt, contact the company directly and do not click on the link.

3. Pension liberation schemes

When you reach age 55, you can access your pension (this is increasing to 57 from April 2028). Fraudsters are using this as an opportunity to tempt those over 55 into bogus investment schemes.  Like Boiler Room schemes, you are usually contacted out of the blue and they may pretend to be from reputable companies like the FCA and pension wise. Again like Boiler Room schemes, they may offer higher returns and guarantees under time restraints.

They may encourage you to transfer your pension to them or withdraw the money from your pension to pay over.  They are often presented as long term investments so it could be some time before you realise it is a scam.

What to do

If you get a cold call, hang up. It is highly unlikely the FCA, pension wise or a reputable Financial Adviser will contact you out of the blue.

Check the FCA register to see if they are a reputable company. If they are, contact the company to see if the person who called you actually works there and if possible, speak to that person.

Don’t be rushed or pressured into making a decision.

Seek Independent Financial Advice, Pension Wise or the Pensions Advisory Service.

4 Home buying Fraud

This can occur where a genuine email from your Solicitor is intercepted by a fraudster and their bank details put in place of the solicitor’s or the frauster sends and email saying the bank details have changed. Once the money is paid over, they withdraw it.

What to do

Watch out for emails with changes of bank details. Check with your solicitor if in doubt.

5 Freebie scams

These Financial Scams offer a free introductory period. In order to get the free period, you have to enter your card details. Once the introductory period end, the monthly subscriptions are expensive and difficult to get out of.

What to do

Read the T&Cs before signing up to anything and be careful about entering your card details online. If in doubt, walk away.

For more FSCS information on financial scams, click here.

Financial Scams a summary

Financial scams are sadly something we will have all been on the receiving end of.  As technology advances, so do the scammers.


  • If it sounds too good to be true, it probably is
  • Don’t be pressured into anything
  • If in doubt, check with a trusted third party
  • Do not pass on your bank details to anyone

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