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FCA targets coronavirus scams

Reports of coronavirus-related fraud increased by 400 per cent from February to March
April 14, 2020

The Financial Conduct Authority (FCA) plans to spend £2.3m on a campaign to tackle the surge in coronavirus-related fraud. 

This comes after it warned last month of “sophisticated” and “opportunistic” scammers trying to take advantage of the confusion surrounding the Covid-19 pandemic, noting the rise in “good cause” scams trying to push high-risk investments in good causes such as the production of new drugs to treat the virus. 

The regulator’s interim chief executive, Christopher Woolard, said: “In a matter of weeks, coronavirus has altered the UK’s financial landscape dramatically.

“At times like this it is more important than ever that the FCA leads the way on the protections of consumers, firms and the markets.”

Reports of coronavirus-related fraud increased by 400 per cent from February to March, with losses totalling over £1.7m, according to national crime reporting service Action Fraud. 

The FCA flagged retail investments and the harm caused by fraudulent and high-risk illiquid investments as areas of particular concern, signalling that the campaign will prioritise these issues to help consumers make better investment decisions. 

It said that pensions are at “significant risk of harm” because of the greater autonomy that has resulted from the introduction of pension freedoms in 2015 and the Defined Contribution (DC) scheme. Victims of scams lose 22 years of pension savings on average, almost three times their annual earnings, according to the FCA. 

The Pensions Regulator (TPR) has warned that concern about stock market volatility could leave savers more vulnerable to scams and to making decisions that could damage their long-term interests. 

The pandemic provides “a perfect environment for pension scammers to operate in”, said a spokesperson. “We want all savers to understand they don’t have to rush decisions and should be cautious about making changes at this time.”

The additional spending by the FCA will be used to build on its existing ScamSmart campaign, which focuses on mitigating consumer harm from fraud related to pensions, investments, loan fees and online activity.

The announcement came as part of the annual business plan, in which the regulator warned that it could be months before it can focus on other priorities. “Where we can take this work forward now, without diluting our focus on the impact of coronavirus, we will. But it may be months before we are in a more stable position,” it said.  

In response to the impact of coronavirus on investors and financial institutions the FCA has also introduced a number of other support measures, including easing the rules for listed companies looking to raise capital.