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Are your children or grandchildren at risk from fraudulent investments?

20th June 2018

Following a recent study, the Financial Conduct Authority (FCA) has issued a warning that young people are most at risk from fraudulent investment schemes which are promoted through social media. Carrying out the study as part of its ScamSmart campaign, the FCA’s research revealed that 13% of respondents under 25 were likely to trust an investment opportunity they’ve received on social media compared to just 2% of those over 55.

Common investment opportunities to be found on Facebook, Instagram and Twitter include Bitcoin, binary options, foreign exchange (forex) and contracts for difference (CFDs). After investments are made, prices are then distorted, extreme pay-out clauses are used to tie people in and accounts can even be closed with any money invested refused to be paid back.

Almost a quarter (23%) of respondents said that they would trust an investment company more if it had positive online customer reviews and testimonies, which can easily be faked by scammers in order to make fraudulent websites look professional. Worryingly, over one in ten (11%) respondents said that they would make an investment online without making even simple checks such as ensuring the firm was regulated by the FCA and registered with Companies House.

In response to the study’s findings, Old Mutual Wealth’s responsible business director, Jane Goodland, called for swift action: “The government needs to give serious consideration to introducing financial education into the primary school curriculum in order to tackle the current epidemic of financial illiteracy and give the generations of tomorrow the knowledge to identify financial scams. While the focus of this latest campaign is on younger people, it’s crucial that all parts of the population are appropriately sceptical when they get an unsolicited email, phone call, or are approached on social media. A healthy amount of suspicion and due diligence is crucial”

However, until managing finances becomes part of the National Curriculum, the best way you can prepare young people in your family to ensure they don’t make serious mistakes with their money is to include them in financial conversations early on. Educating them about potential risks and how to spot them will help to ensure they don’t become the next victim of an online scam.


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Gale and Phillipson Investment Services Ltd, Gale and Phillipson Advisory Services Ltd, Gale and Phillipson General Financial Services Ltd and Gale and Phillipson (SE London) Ltd are all authorised and regulated by the Financial Conduct Authority (Reference Numbers 431387, 142752, 195080, 195522).  Gale and Phillipson (Herts) Ltd and Gale and Phillipson Consulting Ltd are appointed representatives of Gale and Phillipson Advisory Services Ltd.  Gale and Phillipson (Surrey) Ltd is an appointed representative of Gale and Phillipson Investment Services Ltd. (Reference Numbers 615821, 811525, 703337). All companies trade under the name Gale and Phillipson and are registered in England and Wales numbers 05409822, 02232959, 03751076, 04077157, 08864945 and 04823391.  Registered office for all companies is Gallowfields House, Fairfield Way, Richmond, DL10 4TB.

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