6th February 2023
SCAMMING IN PLAIN SIGHT: 1 IN 6 BLACKLISTED FINANCE FIRMS STILL TRADING
- Online security specialist NordVPN today calls for international cooperation to defeat the tens of thousands of fraudulent websites operating worldwide
- Some firms flagged as unauthorised by the FCA still baiting UK consumers 17 years later
- Awash with false claims and generic images, one rogue trading site’s team page features a former Met Police commissioner
London, February 6 2023 — Consumers face running a gauntlet of risky investments as hundreds of suspect companies identified by the FCA continue to ply their trade online1.
New research by NordVPN reveals that the websites of 1 in 6 businesses added to the regulator’s blacklist of unauthorised firms last year remain online and accessible to UK consumers.
Any company carrying out a regulated financial activity in the UK must be authorised or registered by the FCA but the Financial Services and Markets Act (FSMA) 2000 does not give the FCA special powers to prosecute fraud.
NordVPN analysed the continuing online presence of every company added to the register last year1..
Of 1,717 firms added by Dec 7 2022, the websites of 292 (17%) of them remained visible to UK consumers when visited by NordVPN’s researchers. The oldest 2022 listing still visible was added to the register on Jan 6 last year.
Incredibly, some financial websites are still operating despite being added to the FCA’s unauthorised register as far back as 17 years ago.
Heartford Capital was placed on the suspect list in 2006, yet consumers can still access the firm’s website, which says it was founded in 1971 and brazenly claims to be regulated by the FCA, as well as the Australian Securities and Investments Commission and South Africa’s Financial Sector Conduct Authority. The ‘careers’ and ‘customer reviews’ sections of the site show the lengths some scammers will go to in order to make bogus financial products seem legitimate. NordVPN’s analysis revealed that the pictures were sourced from stock image sites.
Thumbing their nose at the authorities, Coin Value Bank, which claims to be “a relentless ally for your financial well-being”, has even used a picture of former commissioner of the Metropolitan Police, Sir Paul Condon, claiming he is their financial manager “Michael”.
Another unauthorised firm includes the FCA’s own initials in its name. TradeFCA claims to have operated since 2007 with offices in Westminster. Its legal small print is gobbledygook but aspiring traders and investors continue to fall for it with disappointed customers leaving negative reviews on Trustpilot, where it still manages a respectable 3.7 out of five star rating. TradeFCA says it offers consumers the chance to trade in stocks, cryptocurrencies, commodities and foreign exchange. Its ‘Investors Platinum’ account generously invites traders to deposit $50,000, offering leverage of 2,000:1 — many times the 30:1 cap for retail traders introduced by the FCA in 2019.
The FCA does have ways of taking websites down. A visit to the website of one unauthorised firm, listed as Profit FX and based in London’s Covent Garden, reveals a message indicating that, with the help of Nominet, “this domain has been suspended on request from the Financial Conduct Authority (FCA)”.
Unfortunately Nominet, the UK’s domain registration authority, can only take down sites with UK domains. NordVPN is today calling for greater international cooperation to make these kinds of takedowns a straightforward process no matter what domain is being used.
Mark Steward, outgoing FCA Executive Director of Enforcement and Market Oversight, addressed this problem in a speech in 2021: “Unfortunately, most scam sites do not have UK domains which makes takedowns for non-UK domains more difficult.”
In the register of unauthorised firms, the health warning above each business states: “We believe this firm may be providing financial services or products in the UK without our authorisation. Find out why you should be wary of dealing with this unauthorised firm and how to protect yourself.
“Almost all firms and individuals offering, promoting or selling financial services or products in the UK have to be authorised or registered by us.
“This firm is not authorised by us and is targeting people in the UK. You will not have access to the Financial Ombudsman Service or be protected by the Financial Services Compensation Scheme (FSCS), so you are unlikely to get your money back if things go wrong.”
Marijus Briedis, Chief Technology Officer at NordVPN, said: “The FCA cannot properly protect UK consumers because its influence is limited to UK domains via Nominet. Scammers routinely exploit this simple loophole because it’s so easy to use the web and social media to target consumers in any country from afar.
“It’s high time domain registries worldwide joined forces to defeat those committing fraud and financial crime online. The main vehicle for these offences is a cheap but effective website, but this can also be their downfall if countries work together.
“The longer a company providing regulated advice and products, or defrauding consumers, remains online, the more victims are tricked into parting with their money. Every one of these companies can see that they feature on the FCA register of unauthorised firms. The fact they are happy for this to remain the case should ring alarm bells. Always check the FCA register before depositing cash with any financial services provider.”
—ENDS—