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The rise in scams and the threat to a legitimate financial services industry

In May, Mr Steward (FCA Executive Director of Enforcement and Market Oversight) spoke at the City & Financial Global - FCA Investigations & Enforcement Summit regarding the rise in scams and the threat to a legitimate financial services industry.

Investment scams can be easily undertaken, and can happen directly to consumers very quickly and effectively either online or through social media.

The FCA has a substantial role to play in preventing harm to consumers from such unauthorised activities, and as a result it has made improvements to address scams as they are happening.

Despite the increased reporting of fraud, Mr Steward noted that fraud remains largely under-resourced by law enforcement with less than 1% of police resources devoted to it.

The Financial Services & Markets Act 2000 (FSMA), which sets out the FCA’s powers and remit, does not give the FCA the power or authority to prosecute fraud. It does however have statutory power over the use of false or misleading statements in relation to securities.

The FCA will continue to ramp up its monitoring activity in this area and is looking to add scams to the Warning List within 24 hours. Regulated firms are encouraged to check this list to ensure they don’t inadvertently assist firm engaging in scams.

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