How Avoid Investment Scams

By J Drew -

How to Avoid Investment Scams


Situations such as the collapse of LC&F highlight the importance of choosing the right investments in the first place.

This list was provided by an investment site suggesting some of the key steps you should take when considering any investment. I believe the list is highly misleading and could easily catch out unwary investors or those who simply don't understand the intricacies of the financial regulation system.

Check it's Authorised - Look on the FCA's register to check the business is actually authorised to conduct financial services businesses. Do an internet search for reviews of the company to find out more about what its customers are saying about it too.

My comment: This is sensible advice up to a point. LCF was listed on the FCA register but the mini bonds it sold were not protected so investors would be left thinking they were covered when they are not.

Understand the Risks - Be certain what the product is and where your money is going. Be wary of any product promising "guaranteed" or "government-backed" returns or too-good-to-be-true interest rates. If it's an investment, your money is always at risk. 

This is good advice. Watch for asset backed, use of the words security/secure/insurance backed. The above LCF promotion shows how misleading it can be when security still means you can lose most of your money.

Take Advice - If in doubt, seek help from a professional. Many people are reluctant to take financial advice because it seems expensive or they don't want to discuss their finances, but as with any area of life it pays to speak to an expert if you lack the knowledge or confidence.

Good advice but when many people can't afford to pay a professional there are lots of other places to get non-tailored advice and feedback. For example the MSE (MoneySavingExpert) forums were repeatedly warning investors to avoid putting money into LCF as far back as 2015.

Don't be Pressured - You should never rush any financial decision and if anyone is pressuring you to make a quick choice, say no - it could be a scam. Any reputable company should be more than happy for you to take time to do your research and think about whether you want to invest or not.

Good advice. Genuine investments do not have high pressure sales tactics.

Read the Small (and not so small) Print


LC&F has issued this Information Memorandum with the words "Investing in LC&F’s Bonds is speculative and involves a significant degree of risk."

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