‘Armchair detective’ investors take inspiration from Sherlock Holmes to foil investment scams

New research from the Financial Conduct Authority (FCA) has found that a quarter (25%) of investors who avoided a scam are taking inspiration from Sherlock Holmes to stop scammers in their tracks.

It comes as the FCA launches its latest ScamSmart campaign which provides investors with the tools to identify and avoid scams. 

Analysis of data from the FCA’s consumer helpline has shown a 193% increase in calls to the FCA in the last five years, as investors detect investment scam warning signs^[1]. In 2022, over £2m was saved by beady-eyed investors, who called the FCA to report the firm or individual before losing money.

Two in five (39%) respondents claim that their investigative or research skills are helping them to spot the clues. A further 32% are relying on pure gut instinct to distinguish between genuine investment opportunities and potential scams.

The research found that ‘detective’ investors cite finding mistakes (34%) and requests for access to their personal details to secure the opportunity (34%) as the most common tell-tale signs of investment scams. Other warning signs that made investors suspicious included being contacted out of the blue (33%) and being pressured to invest before an ‘offer’ ends (26%).

Of the 1,036 investors who have avoided investment scams the FCA surveyed, a third (33%) came across the opportunity via email, while a quarter (25%) received a personal phone call. Once investors realised the opportunity was fraudulent, 42% warned family and friends, while a further 27% posted on social media to warn others. 

Mark Steward, Executive Director of Enforcement and Market Oversight said: “Scammers are becoming more and more sophisticated, coming up with different tactics, such as impersonation texts or calls, and using the cost of living pressure as a way to tempt investors into false opportunities. Once money has been lost in this way, it’s difficult to get back, so if something seems too good to be true, it probably is. It’s great to see so many investors being able to spot the signs of a scam, and helping others to do the same You don’t need to be a Sherlock Holmes to spot scams. 

“Our Scamsmart advice and tips together with the FCA’s Warning List provides all the clues you need to sort the genuine investments from the fraudulent ones.” 

The FCA is calling on all investors to be ScamSmart and check its Warning List before making any investment decisions. This will help identify those who are running scams and are unauthorised to operate, or flag to investors where additional research is needed. 

If investors were to deal with an unauthorised firm, they will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong. 

To help remind investors of the warning signs, the FCA has created an Augmented Reality (AR) experience for investors to use. Usable on mobiles, including Instagram, the AR sees several every day objects representing the main warning signs: 

Phone – Unexpected contact: scammers can cold-call or text, but contact might also come from online sources, or in person such as at an exhibition or seminar

Piggy bank – Unrealistic returns: scammers often promise tempting returns that sound too good to be true

Clock – Time pressure: scammers might offer you a bonus or discount if you invest before a set date

Book – False authority: scammers might use convincing literature and websites, or claim to be regulated [or authorised] by the FCA when they’re not

Leaflets – Social proof: scammers might share fake reviews and claim other clients have invested