🔔 Desperate savers continue to be targeted by the risky or unscrupulous

Author: Anna Bowes
07th May 2020

These unprecedented times mean we are all staying at home so it could be a great opportunity to improve our IT skills. For savers, opening savings accounts online means that you can access the best rates and be more in control of knowing if your account has been successfully opened, as you don’t need to depend on the post to find out if there have been any issues – or worse work your way through a long winded telephone system by calling them directly.

red flag blowing in the wind

However, it’s sensible to be on high alert as there are always unscrupulous individuals out there looking for opportunities to defraud people – not just the vulnerable - and no more so than in a crisis when we may feel we have less access to trusted people to speak to.

Google offers an amazing way for all of us to access almost anything we want in the world from the comfort of our own homes, but this also leaves the door open wide for scammers to take advantage. According to the Telegraph, the regulator, The Financial Conduct Authority, has run its own campaign with Google at a cost of almost £182,000 - in only two months - just to try and alert us consumers to the risks.

I have been contacted over the last few weeks by a number of canny savers who wanted to check if an account they have found by Googling, is real. What seems like a simple search for the best savings rate, can turn up a mixed bag of results.

Customers have contacted us, because they couldn’t see the accounts they found by Googling, listed on our site.

That may have been because it’s an account that has recently been withdrawn – or in one case they had stumbled across an article that was five years old!.

But there are others that are NOT savings accounts at all – well not banks and building society savings accounts, which are covered by the Financial Services Compensation Scheme (FSCS), and therefore not protected should the worst happen.

The most common legitimate, but non cash savings accounts that savers discover and we have written about before, are also known as mini-bonds.

There are also peer-to-peer platform, ‘savings’ bonds.

These are not necessarily bad investments, but the risk involved can be considerable and if something were to go wrong, there is no FSCS compensation, unless you have received bad financial advice, which is a different matter.

The FSCS cover on bank and building society accounts is straightforward. If the bank you have your savings in becomes insolvent, you will receive your money back – up to the maximum level of £85,000 per person, per banking licence.

This is not the case if a mini bond collapses, as illustrated by the London Capital & Finance (LCF) fiasco in 2018 and more recently another mini-bond - Blackmore Bond plc - which collapsed into administration last month.

Mainly as a result of the LCF situation, at the end of last year the FCA announced a ban on the advertising of these products which has helped but not eliminated the issue.

Similarly, peer-to-peer accounts might look like savings accounts but they are not covered by the FSCS and there have been some high profile problems in the sector as well, such as the collapse of peer-to-peer platform, Lendy, in 2019.

And due to this as well as a number of other issues in the sector, the FCA announced new rules to try and protect new or less experienced investors.

But there are some other 'investments' being advertised, that I believe are purely scams.

I’ve recently had some correspondence about bonds and ISAs, apparently offered in the names of JP Morgan and Allianz.

JP Morgan Chase Bank and Allianz Global Investors (UK) Ltd are global entities and legitimate investment companies - but I smelled a rat, as I know that they do not offer any cash savings accounts in the UK market.

I checked on the FCA website and discovered that J.P Morgan Chase & Co, Allianz Asset Management and Allianz Global Investors are clones of the above-mentioned authorised firms.  

A clone firm in one where fraudsters pretend to be from a firm that is authorised by the FCA.  These scammers typically cold-call investors to promote shares, property or other investment opportunities that are non-tradable, worthless, overpriced or even non-existent. These fraudsters claim to represent authorised firms – then give their own phone number, address and website details to possible victims.

So, something else to watch out for I’m afraid.

These are just a few examples and the point is not to scare you from opening and managing savings accounts online as there are a lot of benefits to doing so, as mentioned above.

But it is important to stay vigilant and if it seems to good to be true, it very probably is.

How to try and avoid the scams

If you are looking for the best savings accounts and you see something that is not listed on our best buy tables or on our site, then be on high alert. At Savings Champion we monitor the whole of the UK savings market.

There will be occasions that accounts are not listed, for example if the minimum deposit is more than £25,000 or if the account is only available to existing or local customers. Or if it is an exclusive product.

Therefore, if you see an advert for an account paying more than you can find on our best buy tables, especially if you have done a Google search, it may not be what you think and therefore you should proceed with caution.

Contact us to check if this is a savings account – or something different.

And if you would prefer to consider investments, speak to a financial adviser. Contact us and we can help to point you in the right direction.

Some Top tips

  • Be wary of suspicious or unsolicited emails and avoid clicking on links and attachments.>
  • Install the latest software and app updates on all devices.
  • Carry out research into a company or person before making a purchase online. This should include looking at reviews from other shoppers and googling the company name and the words “fraud” or “scam”.  
  • Check the FCA website for known scams – https://www.fca.org.uk/scamsmart