The City watchdog is planning a major ad campaign to warn consumers over a new explosion of scams and dodgy marketing tactics, as rogue businesses look to exploit the coronavirus pandemic to make a financial killing.
The Financial Conduct Authority, which recently ran a multi-million pound Terminator-inspired campaign to flag up the PPI claims deadline, has put protecting consumers from scammers at the top of its agenda in its business plan to tackle the Covid-19 outbreak.
The regulator has pinpointed retail investments, insurance policies, pensions transfers and high-return opportunities, as ripe areas for scammers and said it would crack down on firms who see “see these times as an opportunity for poor behaviour”.
The FCA, which regulates more than 60,000 firms, is also working with law enforcement agencies and consumer groups to raise awareness of the increased threat.
Pensioners and savers in the retail investment market – which covers pension pots – are most at risk because the sector has been hit hardest by the crisis. With some pension schemes seeing losses of up to 20% since the start of the coronavirus market panic, many account holders might be tempted to switch to riskier investment schemes to make up the shortfall.
The FCA says that consumers who are scammed lose an average of 22 years’ savings.
Meanwhile, claims management firms – the old school nuisance callers who have gone quiet in recent months – are reportedly ramping up their activities by contacting customers about compensation for holidays, weddings, birthday parties and other key celebrations which have been cancelled due to the lockdown.
The FCA is facing its own pressures from coronavirus. It has already been forced to postpone a number of initiatives as it sheds all “non-critical” work to focus on “supporting customers during this difficult period”.
This includes putting the publication of its guidance for firms targeting the vulnerable on the back-burner, while its calls for input on open finance and the use of data and advanced analytics in financial investment markets have also been delayed.
FCA interim chief executive Chris Woolard said: “In a matter of weeks, coronavirus has altered the UK’s financial landscape dramatically. At times like this it is more important than ever that the FCA leads the way on the protection of consumers, firms and the markets.
“Our business plan recognises the impact of coronavirus on the financial services industry, while looking forward at how we transform the FCA’s operations in future.”
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