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14th January 2016
How to Spot a Clone

One of the new ways fraudsters are looking to scam potential investors is by pretending to be an FCA (Financial Conduct Authority) regulated firm. Cloning scams are very much like traditional boiler room scams. Fraudsters from clone firms cold call potential investors to promote investment opportunities and downplay the risks to the potential investor. Fraudsters are usually trying to promote shares, property, wine or other types of assets that are either non-tradable, overpriced or non-existent.

A new tactic has seen fraudsters using the term ‘firm registration number’ (FRN) and providing the address of authorised firms and individuals. This is what we call a ‘cloned firm’. You can verify the identity of an authorised firm by searching the FCA’s register online at fca.org.uk/register, where you will find the company’s switchboard number. Always call the switchboard to ensure that you are speaking with an authorised firm. If there are no contact details on the register, or the firm claims that the details are out of date, please call the FCA’s Consumer Helpline on 0800 111 6768.

Since clone firms are not authorised by the FCA, they are not covered by either the Financial Ombudsman or the Financial Services Compensation Scheme, which means that there is no compensation to individuals who fall prey.

How to spot a clone:

  • It is highly unusual for a legitimate investment firm to cold call potential investors.
  • Fraudsters are likely to use high pressure tactics, for example, promoting an investment which is only available for a limited time, or offering a bonus or discount if the investment is made by a certain date.
  • Potential investors may be asked not to tell anyone about it.


How to avoid investment scams:

  • Reject cold calls.
  • Check the FCA Warning List.
  • Get impartial advice from a financial advisor unconnected with the firm that contacted you.


Concerned investors can keep up-to-date with the latest scams by looking at the scams section of the FCA website www.fca.org.uk/consumers/scams, and can see what investments are on the FCA Warning List.