Don't be flattered into falling for investment scams, over-55s warned
People aged over 55 are being warned not to let investment fraudsters flatter them into parting with their cash, with the average victim of the scam losing more than £30,000.
Less than half (42%) of people in this age group are confident they know how to spot a fraudulent investment opportunity, according to a survey from the Financial Conduct Authority (FCA).
The regulator is warning consumers to be "sceptical and cautious" before investing their money, and that fraudsters will often use psychological games to trap victims, such as flattery or forcing someone to make a quick decision on a "special deal".
It warned that if someone invests their cash with an unauthorised firm, they will have no protection from the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS). These bodies help consumers to get their money back if something goes wrong. Last year, victims of investment fraud lost £32,000 on average.
The FCA said flattery is a common tactic used to swindle people in investment scams. This could include a scammer praising their victim for being a "knowledgeable investor".
Fraudsters may also pressurise potential investors to make a quick decision on a "limited time" investment offer.
The research found that more than half (53%) of over-55s surveyed believed acting quickly can be key to getting a good deal, suggesting that many people could be vulnerable to this tactic.
A third (34%) said it is best not to discuss investment decisions with others and fewer than half (48%) said they would be likely to seek impartial advice before making an investment.
The FCA said fraudsters will take advantage of such behaviour, as they often urge their targets to keep the offer secret to stop others talking them out of investing.
And nearly half (45%) of over-55s surveyed agreed that investment opportunities are more attractive if you know of others who have made similar investments. Fraudsters may also exploit this belief, by claiming that other people want in on the deal or have already benefited.
The pension freedoms introduced in 2015, which give over-55s more choice over how they use their pension pots, could be seen as an extra opportunity by fraudsters to target people in this age group.
Mark Steward, director of enforcement at the FCA, said : "Be alert to the warning signs like being contacted out of the blue, promises of low risk and/or guaranteed above market returns, special deals just for you, time pressure and, very often, flattery."
The FCA runs a campaign called ScamSmart, which alerts people to the dangers of scams.
To avoid being a victim, the FCA urges people to consider getting impartial advice before investing, checking the FCA's register to see if a firm or person is authorised and checking the FCA's warning list of firms to avoid.
It said people should reject unsolicited contact about investments.
TV presenter Nick Hewer, who is supporting the FCA's ScamSmart campaign, said: "They're very clever these people, playing psychological games to win over the trust of often vulnerable victims and that's why I'm working with the FCA to raise awareness of this troubling issue.
"Remember, if it sounds too good to be true then it probably is. If you are offered an attractive investment out of the blue, be suspicious, check the FCA's warning list and seek impartial advice. Better still, if you get a cold call, just put the phone down."
More than 1,000 over-55s took part in the survey.
More information about the ScamSmart campaign can be found at scamsmart.fca.org.uk.