Fraudsters are scamming investors out of more than £1.2 billion a year, according to consumer watchdogs the Financial Conduct Authority (FCA).
The average victim loses £20,000 to crooked investment advisers, says the FCA.
Now, the FCA is launching a campaign to help investors identify fraudsters.
Many of the criminals try to con their victims into investing into dubious schemes that are unlikely to ever produce a profit, such as land-banking, carbon credits and rare earth metals.
One investor was called out of the blue by a firm offering to buy shares he held in a company.
The deal sounded reasonable, but he suspected a scam when the firm demanded a £5,000 bond to seal the deal.
FCA chief executive Martin Wheatley said: “Crooks running investment scams go to a great deal of trouble to look above board but their only aim is to dupe people out of their savings.
“The simplest way to avoid a scam is to ignore cold callers on the phone, by email or letter.”
Among the indicators the bogus adviser is a fraudster are promises of a bonus if the deal goes through quickly.
“They will also talk down risk and tell lies about legal protections and that they are a regulated firm. Other ploys are to suggest that the offer is only for selected investors or has a time limit,” he said.
Warnings about bogus advisers
Dealing with an unregulated firm
If you buy shares, save money or invest with an unregulated firm, you lose any protection offered by the Financial Ombudsman and the Financial Services Compensation Scheme. Broadly, you have no independent place to complain if the deal goes wrong and are unlikely to win any compensation.
Checking if a firm is regulated
Go to the Financial Services Register to check if a firm is regulated in the UK.
Reporting a suspected bogus adviser