Spotting and avoiding financial scams feature in the news a lot. But as scammers become more sophisticated, the number of victims continues to rise.

While many of us think we’d easily spot the red flags, it’s easy to fall victim, especially if you’ve got other things on your mind. Reviewing the warning signs can help you avoid scams should you be targeted. In many financial scams, it’s impossible to reclaim what’s been stolen. It can devastate your long-term financial plans if a scammer is able to get their hands on your savings, investments or pensions. Being vigilant is crucial.

This year the Financial Conduct Authority (FCA) has issued 80% more scam warnings than it did in 2019. Over the last five years, the figure has increased by more than 300%.

One trend among scams is the rise of clone firms. These scammers use the name and details of legitimate financial services firms to dupe victims. With emails that look trustworthy and advertised products that appear legitimate, it can be hard to spot a clone firm. Combined with number spoofing, where a criminal can make it look as though they’re calling from a different number, they can make you believe you’re speaking to a finance professional.

Since 2015, scams involving an impersonation now constitute 45% of all FCA warnings. As a result, it’s more important than ever that you’re cautious when making financial decisions.

5 steps that can help you avoid scams

1. Be cautious of unsolicited contact

If you’re contacted out of the blue, whether through email, text, social media or a call, be cautious. Cold calling is one of the most common ways a scammer will try to engage with victims initially. They’ll attempt to build a rapport and lull you into a false sense of security. There is a ban on cold calling in relation to pensions.

Even if you’re expecting to be contacted, don’t feel too embarrassed to ask for verification if you have some concerns. Legitimate financial services firms will understand why you’re asking.

2. Always check the credentials of those you speak to

Never hand over your personal details without checking who you’re speaking to. One of the first steps to take is to check the FCA register. This register contains all the firms and individuals that are involved in regulated activities. It will also show you what permissions each firm has and their contact details.

As mentioned above, some scammers will pretend to be from a legitimate firm, so don’t just check the register. Verify the contact details and get in touch with the firm using the information on the register directly.

3. Don’t rush into making financial decisions

Scammers rely on you making quick decisions without fully thinking through the consequences. They may use high-pressure tactics to get you to make a snap decision, such as time-limited offers or sending documents to be signed immediately.

The financial decisions you make can have a long-term impact on your situation and plans. Take the time to fully understand what your options are and don’t feel rushed to make a quick decision. Again, if you need more time or would like to discuss opportunities, a legitimate financial services provider will understand this.

4. Focus on your long-term plans

When you’re approached by someone offering appealing opportunities, it can be tempting to take them. However, keep in mind that if something sounds too good to be true, it probably is. Investment opportunities that claim to be low risk but high return, for instance, are a red flag.

While quick opportunities to increase wealth or access assets can be attractive, understanding your finances and long-term plan can help you spot those that are too good to be true.

5. Speak to us

Speaking to someone else about the offer you’ve been made can help you see red flags that you’ve previously overlooked. This may include a partner or someone else you trust. Another pair of eyes can help you identify a scam.

As well as loved ones, as your financial planner, we’re here to offer you support when making financial decisions too. If you’re approached with a financial opportunity, whether a ‘free pension review’ or a high return investment, you can contact us to discuss this. We’ll help you check that it’s a legitimate opportunity as well as reviewing how it fits into your wider plans.

If you have any concerns or would simply like to review your financial plan, please get in touch.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.