The
Financial Conduct Authority (FCA) launched a consumer verification tool this
week as new data reveals 800,000 people in Britain lost money to investment and
pension scams over the past year.
FCA Launches “Firm Checker”
The
regulator’s research covering the 12 months through May 2024 found social media
and phone calls led as the primary contact methods for fraudsters.
About 17% of
victims who experienced Authorized Push Payment fraud or unauthorized
investment scams first encountered the schemes through social media promotions,
while an equal share received initial contact by phone. Another 16% were
approached via text message, WhatsApp, or other messaging platforms.
The new
Firm Checker tool allows consumers to verify whether financial services firms
hold proper FCA authorization and permissions before engaging with them. Nearly
all UK financial firms must carry FCA authorization or registration to operate
legally.
“Ruthless
fraudsters are constantly evolving their tactics so they can steal money from
innocent victims,” said Sheree Howard, executive director of
authorizations at the FCA. “Whether you’re considering an investment,
pension opportunity, loan or other financial service, use Firm Checker to
confirm the firm is authorised and help fight financial crime.”
This is a
follow-up to the announcement made three weeks ago, when the FCA said it could
reduce transaction
reporting costs by more than £100 million by adjusting its requirements.
The changes are expected to lower expenses for retail brokers and support more
consistent market data.
Questions Remain About
Tool’s Design
The
regulator said it designed and tested Firm Checker specifically with consumers
to ensure effectiveness and ease of use, but hasn’t detailed the tool’s full
functionality or technical specifications.
Lisa
Mckinnon-Lower, a partner at law firm Spencer West, raised concerns about the
limited information available. She pointed out that fraud victims often lack
the digital skills to navigate verification systems, especially when fraudsters
apply real-time pressure during pitches.
“Even
where consumers do check authorization, cloned firms and misleading permissions
could continue to create confusion and a false sense of security,”
Mckinnon-Lower said. “If designed well and used correctly, this tool could
be extremely useful at tackling fraud, perhaps beyond the scope currently
envisaged.”
The Firm
Checker won’t confirm Financial Services Compensation Scheme or Financial
Ombudsman Service coverage for specific products. The tool also excludes
certain firm details available on the full Financial Services Register,
including published restrictions on crypto activities, historical fines,
financial promotion approval rights, and client money handling capabilities.
Broader Regulatory
Pressure on UK Firms
The launch
follows the FCA’s recent moves to tighten
oversight of retail brokers, including doubling reporting requirements for all FCA-regulated
entities starting in 2027. The regulator also flagged CFD
firms in November for
inconsistent charges and inadequate consumer protections.
The FCA
notes the tool’s information may take up to 24 hours to update and disclaims
liability for errors in firm-provided data. Consumers must still conduct
independent checks to verify product suitability and protection coverage.
This article was written by Damian Chmiel at www.financemagnates.com.
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