FCA advice on protecting yourself against unauthorised finance firms

Some firms seek to act without FCA authorisation and may knowingly run scams. If you deal with an unauthorised firm, you will not be covered by the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) if things go wrong.

Step 1: Check the FCA Register

You are strongly advised to only deal with financial services firms that are authorised by the FCA. The Register has information on firms and individuals that are, or have been, regulated by the FCA. It can be accessed by the public at www.fca.org.uk/register. If a firm does not appear on the Register but claims it does, contact the FCA Consumer Helpline on 0800 111 6768.

Step 2: Ring the firm back

To confirm the identity of an authorised firm on the Register, ask for their ‘firm reference number’ (FRN) and contact details, but always call them back on the switchboard number given on the Register rather than a direct line they might give you. If there are no contact details on the Register or the firm claims they are out of date, contact the Consumer Helpline.

Step 3: Use the right website

You should access the Register from the FCA website – www.fca.org.uk – rather than through links in emails or on the website of a firm offering you an investment. Also check the address of the website is correct and there are not subtle changes that mean it is a fake.

Step 4: Beware of cloned firms

You should also beware of fraudsters pretending to be from a firm authorised by the FCA, as it could be a ‘cloned firm’. Such scammers often claim to be from overseas firms that appear on the Register as these firms do not always have their full contact and website details listed.

Step 5: Make additional checks

With fraudsters adapting their tactics, you should make additional checks to confirm you are dealing with the financial services firm in question and have the correct contact details – especially if you have been cold-called. You might want to check the details on the firm’s website, with Directory Enquiries or Companies House.

Step 6: Check if a firm is authorised or registered

Almost all financial services firms and individuals must be authorised by the FCA. But certain types of firms may instead be registered with the FCA, including some payment services providers and electronic money (e-money) institutions, mutual societies like credit unions, friendly societies, cooperative societies, working men’s clubs and building societies. You can check the Register to see whether a firm is authorised or registered.

Beware that registered firms do not have to provide the FCA with as much detail about their business and the FCA has less power to check on the firm

Step 7: Search the FCA list of unauthorised firms

You can look through the list of unauthorised firms to avoid doing business with, although their names are likely to change regularly. This is a list of firms and individuals that are currently targeting UK investors and about whom the FCA has received complaints. New names are added to the list as soon as possible, but if the firm which has approached you does not appear on the FCA list, do not assume it is legitimate – it may not have been reported to the FCA yet.

Step 8: See warnings from abroad

If you are dealing with an overseas firm or scheme, you should check how it is regulated and follow similar steps to these. The FCA also has some warnings from foreign regulators about firms conducting unauthorised business.

Step 9: Avoid unwanted sales calls

Keep in mind that authorised firms you have no relationship with are highly unlikely to contact you out of the blue. You can also reduce the number of unsolicited mailings and cold calls you receive by registering with the Telephone Preference Service and Mailing Preference Service.

Step 10: Report an unauthorised firm

If you think you have been approached by an unauthorised firm you should contact the FCA Consumer Helpline on 0800 111 6768. The FCA also has reporting forms that you can use to tell them about an unauthorised firm or broker involved in certain business areas, such as consumer credit, mortgages, insurance products, payment services and share fraud.

Sources: www.fca.org.uk (FCA news item2014/09/12)