The FCA has issued a warning to the public after reporting over £78m was stolen in ‘clone firm’ investment scams during 2020.

Reports of this type of scam jumped by 29% in April 2020 compared to March, when the UK first went into lockdown.

Data from Action Fraud, published as part of the FCA’s ScamSmart campaign, also revealed that consumers reported average losses of £45,242 each on average when investing with fraudsters imitating genuine investment firms last year.

The FCA has advised that anyone considering an investment opportunity should check its Warning List of firms, which is updated daily, and not to deal with a firm that is not authorised by the regulator.

“Clone investment scams can look real and sophisticated but anyone can spot them by following our advice,” said FCA executive director of enforcement and market oversight, Mark Steward.

“Fraudsters use literature and websites that mirror those of legitimate firms, as well as encouraging investors to check the Firm Reference Number (FRN) on the FCA Register to sound as convincing as possible.

“Last year we issued alerts in relation to over 1,100 firms including clones, which has more than doubled since 2019 and we are working with the National Economic Crime Centre (NECC) and National Cyber Security Centre to take down clone sites when they are discovered.

‘If you’re considering an investment, visit the FCA Register to make sure the firm you’re dealing with is authorised. Check our Warning List of firms you should avoid, use the contact details on our FCA Register, not the details the firm gives you, and check for subtle differences to avoid ‘clone firm’ scams.”

The regulator suggested the ongoing financial impact of COVID-19 may also make people more susceptible to these types of clone scams.

FCA research among 1,003 respondents found that 42% of investors say they are currently worried about their finances because of the pandemic, while 77% have or plan to make an investment within the next six months to help improve their financial situation.

However, the FCA also highlighted that even the most experienced investor could be at risk. Three-quarters (75%) of investors said they felt confident they could spot a scam, although 77% admitted they did not know, or were unsure what a clone investment firm was.

Commenting on the latest campaign from the FCA, AJ Bell senior analyst, Tom Selby, said: “Cloning appears to be an increasingly popular tactic among scammers. The appeal of this model to fraudsters is obvious – regulated firms and particularly well-known brands are trusted by their customers, which will likely mean potential victims are less wary when dealing with someone pretending to be that firm.

“While important work has been done by the government, regulators and the pensions industry to tackle fraud, it is ultimately down to individuals to be vigilant and protect themselves from financial disaster.

“The golden rule should be that, if you are in any doubt about whether or not the firm you are dealing with is legitimate, do not part with your hard-earned savings.”

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