New clone firm investment scams in pandemic
05 March 21  /  News

Latest report highlights an increase in investment scams during the pandemic.

According to a new report issued by fraud reporting centre, Action Fraud, victims lost an average of £45,242 last year, after they invested with fraudsters who were imitating genuine investment firms.

The rise would appear to tie in with the first lockdown period, with reports of clone firm investment scams rising by 29% in April 2020 compared to the previous month. More than £78m was lost in total and a UK financial watchdog has warned people to remain alert.

How they work

The scam works with scammers setting up clone firms – using the name, address and reference number (FRN) of real companies that have been authorised by the Financial Conduct Authority (FCA). They send out sales material linking to the website of legitimate companies, tricking potential investors into thinking they’re dealing with the real thing.

They then use their own – but similar – contact details, so investors think they are investing money with the real firm. Moreover, they encourage investors to make large or regular investments before they disappear with the money.

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said: “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." He also pointed out that the ongoing financial impact of Covid-19 may have made people more susceptible.

A typical victim

One victim lost £40,000 after investing with what she thought was an investment in student accommodation, believing the opportunity to be genuine after finding legitimate details of the company online. Having made a number of investments over a few months and not receiving confirmation of the last investment, she tried to call the contacts she’d been speaking with, but the numbers were invalid. It became obvious she had been scammed.

Action taken

Alerts were raised about some 1,100 firms last year, including clones, which was double the number of the previous year. As soon as they are discovered, authorities are taking them down, but potential investors need to double check every detail of a firm before parting with their money.

Avoid the scams

The FCA is running the ScamSmart campaign, giving tips on how to protect yourself from clone investment firms. They include:

  • Reject unsolicited investment offers whether made online, on social media or over the phone. Be wary even if you initiated contact
  • Always check the FCA register to make sure the firm is authorised and check the FCA warning list of firms to avoid
  • Only use the telephone number and email address on the FCA register, not the contact details the firm gives you, and look out for subtle differences
  • Consider seeking impartial advice before investing

We would draw your attention to the last point, in particular. As Financial  Planners, Mathews Comfort works to the highest professional standards and is authorised and regulated by the Financial Conduct Authority, designed to protect the integrity of the UK financial system and ensuring we offer an open, transparent, accountable service - so, please always talk to us.

If you’d like to discuss any aspect of your financial future, current financial plan or desire to implement a lifestyle financial plan, please get in touch. Either call us on 01865 208 000 or email us at:



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