Hovannes invested £50,000 into a bond with what he thought was a genuine business, but when he later tried to contact the business about his investment, he couldn't get hold of anyone. Fraudsters had impersonated a genuine investment company. He contacted his bank about what had happened, but was unhappy with their response so he contacted us to complain.
What happened
Hovannes, unhappy with the amount of interest he’d made on his savings, was looking to invest his money safely for a better return. He looked online and found what appeared to be a fixed-rate savings bond, that carried no risk and offered a better rate of interest than his bank was paying him.
The bond appeared to be offered by a business he’d heard of – a major investment bank. After filling out some details online, Hovannes was contacted over the phone by someone claiming to work for the investment bank. Hovannes was impressed with how professional the caller was, the glossy paperwork that they provided and their sophisticated-looking website. The caller even provided a Financial Conduct Authority registration number which linked to the genuine firm. Unfortunately, Hovannes was speaking to a fraudster who’d impersonated a genuine business. The website Hovannes had been on was in fact a sophisticated clone.
Enticed by the better interest rate, Hovannes had agreed to invest £50,000. It was a year later, when his bond should have been maturing, that he tried to contact the business, but the phone number had been disconnected and the website he’d seen had disappeared.
Hovannes’ bank said he ought to have carried out more checks before proceeding. They pointed to a warning on the FCA website about fraudsters impersonating the genuine investment bank and argued the rates of return were too good to be true.
What we said
We reviewed the information and thought that the scam was quite sophisticated – we could understand why Hovannes was convinced to invest. And, although the rates offered were better than he was getting, we didn’t think they were too good to be true and nor did we think there was anything in the paperwork nor the website that ought to have given him concerns.
We accepted that Hovannes could have checked the FCA website, but he wasn’t an experienced investor and given that he thought he was dealing with a straightforward product – provided by a company – we didn’t think his actions were unreasonable. Hovannes was unaware websites could be professionally cloned in this way.
Given how unusual the transaction was for Hovannes, we also thought the bank ought to have questioned him about it before allowing it to leave his account. Banks have been aware of the specific risk of cloned firms for some time and, had they explained the risk to Hovannes, we thought the scam might well have been prevented.
Overall, we were satisfied Hovannes had a reasonable basis for belief that the investment was legitimate and the bank should have intervened before allowing the payment to proceed, so we asked the bank to refund him in full.
Some ways to help protect yourself against an investment scam
- Use a reputable source to look for investments. If promised returns are better than elsewhere, then treat this with caution.
- You can search the FCA register to find out details about an investment firm – https://register.fca.org.uk/s/. You should check not only whether the investment firm is on the register, but also whether there are any warnings about fraudsters impersonating it. Even if there are not, use the contact details for the business on the FCA register to contact it and ask it to confirm whether the investment exists. Remember websites can be cloned so you should use the contact details on the FCA register to verify you’re really speaking to the genuine business.
- If a business offering you an investment isn’t on the FCA register that means they aren’t regulated by it – so be extremely cautious. They might be a scam and, if things go wrong, you won’t be protected.