A surprising 40% of financial investors report wishing they had spent more time researching their investments, according to research conducted by the Financial Conduct Authority (FCA) and Financial Services Compensation Scheme (FSCS).
The report found that 42% of young UK investors between 18-24 made their latest investment while sitting in bed, watching streaming entertainment, spending time at the pub or returning from a night out.
Lack of Investment Research
The FCA and FSCS commented that the environment investors made their portfolio decisions in made them highly susceptible to scams and false investment opportunities, leaving them vulnerable to having their money funnelled off in illegitimate offers.
Approximately 44% of the 37% of adults actively participating in the investment field said they regretted not spending more time researching their investments, however respondents pointed out that they didn’t conduct adequate research due to finding the exercise too complicated and time-consuming.
“With almost two in five adults holding investments in the UK, it’s clear there’s a growing appetite to start investing as online platforms are making it easy and accessible for everyone,” said FSCS spokesperson Lila Pleban.
“But as our findings show, carving out time to research and look into investment opportunities is not always top of people’s to-do lists and unfortunately, puts them at a higher risk of being scammed or putting their money with an unprotected platform or provider.”
Fraud Risk
The organisations also highlighted that 27% of investors confirmed that they were more likely to invest in an offer with a limited time frame, which is a common scare tactic used by scammers to drive investors to finance a scheme without conducting adequate research into the opportunity.
The FCA directed investors to check out investment schemes on the FCA Warning List to see if the venture is running without government authorisation.
Concerningly, 22% of respondents said they hadn’t confirmed if their investment was FSCS-protected, which would have provided a scammed investor with up to £85,000 in compensation from the FSCS against any FCA authorised firm which has failed.
The FSCS urged investors to use its recently launched Investment Protection Checker tool, which consumers can use to check if their investment is protected.
“While FSCS can’t offer protection for consumers if they are the victim of a scam, our new Investment Protection Checker offers an easy and quick way for consumers to check whether the investment they are looking to make is protected – empowering them to make informed decisions about where to put their money,” said Pleban.
The FCA also highlighted available information to brief investors with typical fraudulent tactics on investment offers on its ScamSmart page online.
“Fraudsters will always find new ways to target consumers, so make sure you do your homework and spend some time doing research,” said FCA director of enforcement Mark Steward.
“Just a few minutes can make a big difference to your investment choices.”
