The Financial Conduct Authority (FCA), UK’s financial regulatory body, today announced a new strategy to tackle investment scams. The authority is also planning to take several measures to encourage investment in regulated financial instruments.
According to the recently introduced strategy, FCA aims to halve the number of consumers who are investing in high-risk products by 2025. The regulatory body will also publish the outcomes of the new strategy in the near future.
In the coming years, FCA will introduce effective measures for the detection and prevention of investment fraud. In 2020/21, UK-based investors lost nearly £570 million to investment scams. Since 2018, the number of investment frauds in the UK has increased substantially.
To achieve the mentioned targets, FCA has set out a package of measures including the launch of a new £11 million investment harm campaign, to help consumers make better-informed investment decisions and to reduce the number of people investing in inappropriate high-risk investments.
Commenting on the latest announcement, Sarah Pritchard, Executive Director of Markets at the FCA, said: “Investors have never had more freedom – technology has democratized the market, new products have become available, and people have better access to their life savings than before. But that freedom comes with risk. We want to give consumers greater confidence to invest and to help them do so safely, understanding the level of risk.”
In August 2021, Australian Competition and Consumer Commission (ACCC) released a report on the rising investment scams in the country and mentioned that Australians lost more than $70 million to illegal investment schemes during the first half of 2021.
FCA’s Package of Measures
In addition to the reduction in investment scams, FCA aims to encourage investment in regulated and relatively straightforward financial products.
“The package of measures we have announced today are intended to support that – we want people to have greater confidence to invest. We also want to be able to adapt more rapidly to the changing market and be assertive where we see poor conduct and consumer harm,” Pritchard added.