The Financial Conduct Authority (FCA) has today launched Firm Checker, a tool for consumers to quickly and easily check whether firms are authorised to provide financial services.
Around 800,000 people reported losing money to investments or pensions‑related scams in the 12 months to May 2024, according to FCA research. The regulator has launched Firm Checker in a bid to help consumers avoid scams and significantly reduce their chances of falling victim to fraud.
“Ruthless fraudsters are constantly evolving their tactics so they can steal money from innocent victims,” said Sheree Howard, executive director of authorisations at the FCA.
“Whether you’re considering an investment, pension opportunity, loan or other financial service, use Firm Checker to confirm the firm is authorised and help fight financial crime.”
The FCA’s survey of 17,950 adults revealed those who experienced Authorised Push Payment (APP) fraud or unauthorised consumer investments or pensions-related fraud were most likely to have heard about it by seeing it promoted on social media or via telephone call (both 17%), with 16% approached via text message, WhatsApp or another messaging service.
Consumers are taking some precautions to protect against fraud, with 72% of adults saying they always or usually reject or ignore unsolicited calls, emails or text messages about investment or pension opportunities. Six in ten said they always or usually verify the authenticity of emails, messages or calls before providing personal or financial information.
But with increasingly sophisticated scammers making it difficult for consumers to know if they’re dealing with a real firm, Firm Checker adds an extra layer of security.
“The launch of the Firm Checker sounds to be an extremely positive and necessary step in strengthening consumer protection against fraud,” said Lisa Mckinnon-Lower, partner at law firm Spencer West LLP.
“In practice, once funds have been transferred, the legal and practical avenues for recovery are all too limited. I regularly advise clients who have fallen victim to professional-looking schemes only to find that tracing assets is extremely difficult and the cost of pursuing legal action is prohibitive.
“It is often difficult to encourage engagement by prosecution authorities for the same reason. This means that by the time advice is sought, the opportunities for meaningful intervention have often passed.”
Firm Checker has been specially designed for, and tested with, consumers to make sure it is effective and easy to use. The Financial Services Register remains in place as the full regulatory record of the authorised financial services population, the FCA said.
However, Mckinnon-Lower warned that many of the people who fall victim to scams may struggle with a digital tool.
She explained:
“Whilst the full details of the tool’s functionality are not yet clear, my primary concern is that those most frequently victimised by these scams are not always equipped to navigate digital verification systems, particularly when they are being pressured in real time by sophisticated fraudsters. Even where consumers do check authorisation, cloned firms and misleading permissions could continue to create confusion and a false sense of security.
“If designed well and used correctly, this tool could be extremely useful at tackling fraud, perhaps beyond the scope currently envisaged.”
The FCA said it will continue to explore where further clarity can be added and is making improvements where necessary to ensure the best possible user experience. Firm Checker is one of a number of ways people can seek to protect themselves from scams, it added.
