The City regulator has warned that scammers may take advantage of stock market volatility to advise consumers to invest in non-standard assets such as peer-to-peer lending.
The Financial Conduct Authority (FCA) has issued new advice on avoiding Covid-19 scams, which include a warning on ‘non-standard investments’ that links to another FCA webpage warning consumers of high-return investments.
Here it lists P2P lending alongside other investments such as unregulated collective investment schemes and land banking.
“A major event like Coronavirus can initiate new types of scam activity,” said the FCA. “You may have already seen reports of fraudulent activity around the sale of face masks and hand sanitiser.
“When it comes to financial services, the scam activity is more nuanced and often appears after the initial shock of a major event. With that in mind, we are urging consumers to be vigilant for scams that could appear over the coming months.”
Other potential financial scams highlighted by the FCA include loan fee fraud, clone firms and fraudulent messages asking for money to be transferred to your bank.
“You can’t criticise the FCA for advising consumers on coronavirus scams because there are scumbags out there who would try to take advantage of the situation,” said David Bradley-Ward, chief executive asset-backed P2P lender Ablrate.
“That FCA webpage is what it is. I think it’s an issue for regulated business to be included alongside non-regulated businesses but the FCA wanted to point out P2P can be high-risk.”
Other advice from the regulator on Covid-19 scams included for consumers to be aware of clone firms and fake claims management firms contacting them and of cold calls stating their bank is in trouble due to the pandemic.
The FCA has come under fire from the P2P industry lately. The regulator spent money on Google adverts warning consumers about high-return investments such as P2P. It separately aired concerns that the sector is high-risk, which platforms claimed was unfair and unhelpful for the industry.
The regulator declined to comment further on its new advice on Covid-19 scams and said all the information was available on its webpages.