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Attack of the clones: why wealth firms are popular scammer targets

Attack of the clones: why wealth firms are popular scammer targets

The Financial Conduct Authority has recorded almost 100 cases of firms being cloned so far this year, and a look at the figures over the last 10 years suggests this threat is on the rise.

Large investment management companies such as RBC Wealth Management, Fidelity and BlackRock have all been targets of scammers who use the companies’ name, registration number (FRN) and address to suggest they are genuine.

Referred to as ‘clone firms’ the number of these companies added to the FCA’s unauthorised list has gone up by 62% over the last five years, compared to the period between 2007 and 2011. 

In the past 10 years, the highest number of cloned firms recorded was 153, in 2016. While in 2017 there has been over half of that recorded already (95 clones) on the FCA’s warnings page, with the potential of this rising still.

The FCA has warned that while it adds firms to its list as soon as possible, this is not an exhaustive collection, and that consumers should not ‘assume a firm is legitimate just because it does not appear in this list. These firms frequently change their name and it may not have been reported to us yet’.

The increase in these types of scams has coincided with the prevalence of other types of internet fraud, including identity theft and ransomware, as scammers take advantage of the global reach of the internet.

Larger, more visible brands lend themselves to these types of scams, with many household names, including the FCA itself, recently being targeted.

A number of large wealth managers have also been caught in the mix, with Raymond James and Tilney both having to alert the City watchdog to the presence of clones.

‘We became aware of a fraudulent website trading under the name of Tilney Fund Managers without being regulated by the FCA,’ said a spokesperson for Tilney.

‘We alerted the FCA immediately and took legal action in order to take down the fraudulent site as soon as possible. It was taken down within a matter of a week.’

Similarly Raymond James took steps to make sure the regulator was informed.

‘The unscrupulous activities of fraudsters using clone companies has the potential to cause harm to both clients and regulated businesses,’ commented Mark de Ste Croix, head of compliance and legal at Raymond James.

‘It’s important that wealth management firms take swift action when they become aware of any such situation.’

If any Raymond James website is cloned, the company has ‘a series of measures in place to ensure the relevant people are informed, appropriate warnings issued, and that fake sites are shut down as quickly as possible’.

These include:

• Notifying the firm’s UK information security officer and counterparts in the US to arrange for the site to be blocked within the Raymond James network,

• Identifying where the site is hosted and inform the hosting firm who is often able to take down the site,

• Notifying the FCA to have a notice swiftly added to the company’s FCA information,

• Working with various search engines to get the website blacklisted, in line with their policies and procedures.

Despite the rapid response process for dealing with clone companies when they are discovered, the onus of checking if a company is legitimate still resides with the consumer.

The FCA advises consumers to only deal with financial services firms that it has authorised and that consumers should check its register of authorised companies.

‘If you give money to a clone or unauthorised firm, you will not have access to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong,’ the FCA warns on its website.

 

CLONED FIRMS: 

•  UBS Wealth Management/ UBS Global Wealth Management
•  BNY Mellon Wealth Management
•  Pictet Private Wealth Management
• St James Wealth or St James’s Wealth Management Group
•  Miton Asset Management

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