Clone firms pose consumer threat

Clone firms pose consumer threat

Consumers should be wary of unauthorised firms targeting their business and personal details, the FCA has warned.

The regulator has issued details of unauthorised firms cold calling consumers in an attempt to illegally sell services or products while posing as authentic businesses.

Fraudulent businesses that have been identified so far include Discretionary Unit Fund Managers, International Asset Management Group and Zurich Prime. The threat of data fraud is particularly high within the financial services sector, as consumers’ information relating to their finances are particularly valuable to scammers looking to create false accounts or sell the data on the black market.

Richard Kirk, senior vice president of data protection specialist AlienVault, said, “Data fraud is already a threat and millions of people suffer from financial scams every year. It is likely to become much more pervasive with the increased use of the internet by both service providers and their customers.

“There is currently an increased push towards the use of the internet as a sales channel, mostly driven by pressure on the financial services industry to lower costs. This opens the door to innovative data fraud, and the financial industry should start to further their collaboration on threat data in order to combat this,” he added.

Warnings against scammers have become more prevalent since the retirement freedoms came into effect in April.

Financial planning firm deVere Group reported earlier this year that the number of enquiries it has received from clients concerned about fraudulent calls has “skyrocketed” since the pension reforms took effect, stating a 35 per cent month-on-month increase. Some of these queries from clients came after they had already transferred funds to the unlicensed firm.

Tactics used by these criminals include fake trading names, websites, logos, and business cards that often closely resemble those of legitimate firms or advisers.

Cold-calling is a typical method, promoting investments, such as shares or property, that are non-tradable, over-priced, of no value, and to some extent non-existent.