In a newsletter on its website, the Fos revealed that a total of £755m ($988m, €874m) was lost to financial fraud in 2015, an increase of 25% year-on-year, with 16% of scams involving bank transfers.
Fos chief executive Caroline Wayman said that financial scammers were using new technology – intended to make consumers lives easier – to try and con people.
“Unfortunately, scams are a fact of daily life – and when daily life changes, scams evolve with it,” she said. “In particular, new technologies – which should make life easier – inevitably come with new risks.”
Citing a 2015 Opinium survey, the Fos found that 63% of people in the UK had received a suspicious call over a 12-month period, with 7% of the UK population falling victim to phone fraud between 2010 and 2015.
Pension scams
Meanwhile, Mark Steward, FCA director of enforcement and market oversight, said the regulator was coordinating its efforts with a range of agencies, including the Fos, to clampdown on pension fraud as only a “limited number” of investment scams were within the FCA’s remit.
“We continue to coordinate our efforts across our supervisory, intelligence and enforcement functions in our work on scams and, in particular, those that are targeted at consumers’ pensions,” said Steward.
According to the regulator, it managed to return £1.9m to fraud victims in 2015, jailing eight people for a total of 32 years while freezing more than £2.7m. On top of that, the FCA confirmed it has issued public warnings about 250 unauthorised firms.
‘Shambolic’ FCA response
Last week, Angela Brooks, chairman of advocacy group Pension Life, told International Adviser that pension liberation scams are increasingly being endorsed by FCA-regulated financial advisers who persuade people to sink their retirement savings into unregulated investment products.
The former tax adviser, whose organisation is currently helping 800 victims of pension liberation scams worth up to £1bn, describing the regulator’s response as “shambolic.”
“I’ve personally been down to the offices of the FCA to warn them and give them information about these scams and not once has anyone from the FCA come down to greet me. They just don’t care,” said Brooks.
Case study
In one case, the Fos ordered an adviser to pay out after it found he had failed to prevent an email fraud, which cost his client £250,000.
The client, called Ms Q by the Fos, lost £250,000 of her bond savings after scammers hacked her email account and instructed her adviser to process the transfer to an account based in Hong Kong.
Despite the investment bond provider repeatedly flagging up warnings over the details of the withdrawal, the adviser proceeded with the transfer.
The woman was only alerted to the fraud after her investment bond provider sent a letter confirming the withdrawal.
After reporting the fraud to the police, she was able to recover £170,000 of the total money lost but asked her adviser to make up the difference.
The client took the case to the ombudsman after her adviser only agreed to pay 25% of the £80,000 she had lost. However, the Fos ruled that the fraud could have been prevented and ordered the adviser to redress the full amount.
