Fraud Prevention Service
Kim is a dentist based in Merseyside, and a long-term client of one our advisers, Martin Brown. Kim emailed Martin as he was about to receive the lump sum from his NHS pension and was looking to invest it. He was interested in a low risk, income producing asset and was keen to buy a UK Treasury Bond. He had received some details from a company that could arrange this investment and as they described it, there were “no fees as our commission is charged to the seller at a fixed rate of 1%”. The company had a fund fact sheet and a website that confirmed they were authorised by the FCA.
Our first thought was that our client, Kim had secured a fantastic investment and we wouldn’t be able to compete. This was a bit of a surprise for us as we’re Independent Advisers, with the ability to offer investment products from across the whole market place – so as you can imagine, this doesn’t happen very often to us.
It all looked great. In fact, it looked too good to be true. So, despite the fact that the company appeared to be authorised by the FCA and looked legit, Martin decided to do a bit more digging. Once we’d reviewed a few more details, we were able to confirm to Kim that this was not a genuine investment opportunity and we helped him secure his entire NHS pension lump sum.
I’ve summarised the clues we spotted as follows:
There were several spelling errors in the email to the client – not indicative on it’s own, but a little bit odd for an investment company that advises on significant investments
The interest rate of 5% with a guaranteed risk-free return just didn’t look right. We know that risk and reward are directly correlated, and in this current low interest environment, risk-free returns are typically 0.5-1% a year
We couldn’t work out how the adviser was actually going to get paid a commission on a UK Treasury Bond without it affecting the value or the return
The fund fact sheet - although impressive with the correct ISIN (International Securities Identification Number) - wasn’t factually correct as it implied the bond could be purchased at the issue price which wouldn’t be the case
The website of the company looked fantastic with a full set of terms and conditions – however:
One of our investment partners also looked into this and their cyber filters blocked the site
The reason the site was blocked was because the '“investment company” website had only been set up two weeks previously
The T&C’s were a direct copy from a leading investment house (which we found out by simply copying and pasting into Google)
There were no team photos on the website or names of the adviser that was selling the bond
Based on the above, we were 100% convinced this was a potential fraud and Kim was delighted he had a trusted adviser he could contact to get a second opinion and avoid the pain and financial consequences of losing a significant amount of capital.