How to be better protected from financial crime

Financial crime is becoming more persistent and methods used by criminals are becoming more sophisticated. Technology can help to defeat the scammers and there are further steps you can take to ensure you don’t fall victim to their schemes.

In the summer of 2019, before anyone had even heard of COVID19, I reported that the UK had seen £197m in investor losses due to scams and fraud in 2018.


This figure was alarming enough, but pales next to the £657.4m in victim losses reported by Action Fraud – the UK’s national reporting centre for financial crime – in the 12 months to September 2020. The pandemic has triggered a surge in this form of criminal activity, much of which has targeted vulnerable people.


Scam incidents continue to rise


Simple, low cost (to the criminal) activities such as phishing and spoof emails have been on the rise, whereby personal and security information is obtained via emails and links that take you to official-looking web pages. No matter how tech-savvy you are, anyone can be duped – as this article and this report about millennials illustrate.


In particular, criminals have been targeting those approaching retirement, coercing them into transferring their pension assets to products that are unregulated, significantly high risk and therefore unsuitable, or simply do not exist – whereby the funds are stolen outright.


Website cloning has also become prevalent. In January this year the FCA released a warning statement informing the public that over £78 million had been stolen by criminals setting up websites that mirror those of legitimate firms. These provide authentic-looking literature offering attractive returns, which entice people to transfer funds that are never seen again.


Leveraging technology and skills


The good news is that many financial services providers are taking their responsibility for consumer protection seriously and have been improving their defences during the pandemic.


A couple of weeks ago I presented at the Financial Crime & Cyber Resilience Conference run by our trade body the Personal Investment Management and Financial Advice Association (PIMFA). The panel discussion focused on lessons learned in 2020 and priorities for 2021. What came across strongly was that while the pandemic has presented many challenges, the right combination of technology and skills enables firms to protect clients against the rising threat of investment scams and fraud.


Netwealth is uniquely placed to meet this challenge, as our proprietary platform allows us to tailor our response to the changing threat landscape. Early in the pandemic we combined enhanced technological and procedural controls with staff awareness training, particularly in respect of vulnerable clients, to identify and tackle attempted fraud and scam activity head on.


We recognise that clients may feel anxious, and at times overwhelmed, by the potential threats from scammers, so we take all the steps we can to reassure them. 


What you need to know (and do)


One of the most powerful weapons we have in the fight against financial crime is consumer awareness. Forewarned is very much forearmed, so it is now more important than ever that investors maintain vigilance and protect themselves.


As I recommended in my previous article you should always keep an eye out for any unusual behaviour or anything that might seem out of place.


  1. Always take a moment – To ask yourself ‘Could this be a scam?’. Examine email addresses and weblinks to make sure they are authentic.


Remember: Netwealth will never request your security information or ask you to carry out any form of transaction by email.


  1. Stay safe online – Using passphrases and password managers. Our Chief Technology Officer Chris Arnold posted this very useful article last year that provides expert advice on simple and effective methods for maintaining your online security.


  1. Maintain healthy scepticism – If you are approached or find yourself directed to a website promoting high-return investment opportunities, particularly in respect of your pension, use resources such as the FCA Register and Warning List to check the firm is regulated, reputable and that their website isn’t a clone.


When it comes to your future security and your own personal wellbeing, it pays to be cautious, so don’t ever feel rushed to make a financial decision. Above all, I would always encourage anyone to seek advice before investing.


Please remember that when investing your capital is at risk.

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