The UK's fight against skimmers and scammers

The UK's Financial Conduct Authority (FCA) has released a speech on 'Investment fraud'  by Charles Randell, Chair of the FCA, which was delivered at the Cambridge Economic Crime Symposium this week.

The FCA is poised to restrict the sale of high risk assets but warned banning unregulated products altogether was 'not quite so simple'. According to the Chair of the FCA, much confusion existed in the market about which financial products were regulated and which were not. 

Highlights from the speech

• The FCA committed to success of Economic Crime Plan alongside public and private sector partners to beat investment fraud
• Fraud prevention needs to be embedded in development of new savings and investment policies
• It is vital to reduce confusion around what is and isn’t regulated and protected by the FSCS to promote responsible saving
• Call for non-financial firms that enable fraud to step up their contribution to the fight against it
  

Financial crime, specifically fraud against individuals, has reached epidemic proportions. One of the most damaging financial crimes is investment fraud, where people are scammed out of their savings. 'This evening I want to pose some questions about the system for combatting investment fraud, from the point of view of the Financial Conduct Authority, one of the many bodies with a role within this system', Randell said.

The high-profile case of London Capital & Finance has most recently brought the issue of blurred lines between regulated and unregulated financial products into the spotlight. Bondholders face losses in the millions after investing with the mini-bond provider, which was authorised by the FCA but did not need authorisation to issue the unregulated investments. According to the FCA London Capital & Finance signed clients up to fixed-rate Isas promising 8% interest, with investors' capital then invested into mini-bonds used to issue loans to small businesses.

As mini-bonds are unregulated investments the issue of whether clients can now claim under the Financial Services Compensation Scheme is still under debate. 

Full FCA Speech