RegulationMay 15 2013

deVere calls for action to stop ‘cloned’ firms

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The FCA’s latest warning included a 10-point plan to help clients avoid the cloned firms and revealed that international groups such as the deVere Group had been targeted.

The FCA said the cloned firm, DeVere & Partners UK Ltd, operates in London but has nothing to do with the registered deVere Group. Nigel Green, chief executive of the deVere Group, said: “It is often said that imitation is the highest form of flattery, but in this instance it can be the most damaging.”

He called for the financial services industry, police and the FCA to work together to stamp out the practice. Mr Green added: “It appears that a new and disturbing trend of scams has emerged with fraudsters counterfeiting the identities of legitimate financial firms and using ‘boiler room’ tactics to dupe unsuspecting investors out of their hard-earned savings.

“We are aware that some potential investors have been visited and persuaded to invest in counterfeit investments with fraudsters even adopting the names of legitimate financial advisers. Naturally such malpractice is damaging to our enviable reputation, potentially financially detrimental for would-be clients, and could lower confidence and trust in the financial services industry as a whole.”

The FCA’s 10-point plan is designed to help with identification of unauthorised firms.

The regulator said that protection under the Financial Services Compensation Scheme, or the Financial Ombudsman Service, does not apply to unregulated advisory or investment companies.

The FCA announced in April that it would issue alerts about unauthorised firms which offer services that could appear to the uninitiated to be regulated advice. It has subsequently named almost 30 firms involved in the practice in the past three weeks.

Key steps to avoid cloned:

• Check the FCA register to ensure the firm and individuals are regulated.

• Call the firms back and ask for their firm reference number and contact details.

• Make additional checks on the company’s website, with Companies House and directory enquiries.

• Search the FCA’s list of unauthorised firms.

Adviser comment

Philip Milton, managing director of Devon-based Philip J Milton & Company, said: “I have come across this problem in the past with ‘boiler room’ scams. These fraudsters will do what they can to extract as much money as possible and often copy company websites to make them sound as plausible as possible. I think it’s good that the FCA is taking some sort of action, but it is treating the symptom rather than the cause.”