Savers lose BILLIONS as banks miss scam warnings – how to fraud-proof your cash

Credit: Getty MAJOR banks are facing questions around their role in enabling savers to pour billions of pounds into high-risk schemes that have since collapsed. The City watchdog, the Financial Conduct Authority (FCA), is looking at regulated firms, including banks, where their services may have been used by high-risk schemes. It comes after thousands of people poured their cash into schemes promising bumper returns – only to collapse amid allegations that some operated as Ponzi schemes, according to The Times. NatWest, Lloyds and Barclays are among the major high street banks that are facing questions over whether they missed warning signs of scams while handling customers’ cash. Sign up for the Money newsletter Thank you! That’s because customers transferred their savings into accounts at these banks operated by the companies running the schemes. The FCA has previously warned that banks and other regulated firms must carry out proper checks on unregulated businesses they deal with and understand how those companies operate. A spokesperson for the regulator told The Times that too many people are being drawn into high-risk schemes with “little protection and devastating consequences”. It added that it is “looking closely” at the role of regulated firms, including banks, where their services may have been used. One of the most serious cases involves a company called 79th Group, a property investment business which collapsed into administration in April last year. Insolvency professionals have alleged that the group operated as a £250m Ponzi scheme, although its operators deny any wrongdoing. Most read in Money Around £110m of customers’ money was processed through a NatWest account linked to the group, according to The Times. The newspaper said NatWest continued to receive money on behalf of 79th Group for at least seven months after the FCA referred concerns about the company to the police. Lloyds is also facing questions after around £160m of customers’ money was handled through the bank for property investment firm Godwin Capital. Barclays is facing similar questions for providing banking services to a company called Halcyon Developments Group, a failed scheme linked to a luxury resort in France. A Barclays spokesperson told The Times the bank takes its responsibility to prevent financial crime “extremely seriously”. Many of the failed schemes involve a type of investment called “loan notes”, which is where customers effectively lend money to a company in exchange for a high interest rate. But many of these schemes are unregulated, meaning customers have fewer financial protections. The regulator has repeatedly warned savers over high-risk unregulated investments. Banks are required to have systems in place to prevent their accounts being used for financial crime. A NatWest spokesperson said: “The bank will not make any comment on specific cases. However, NatWest Group actively works with industry, law enforcement and regulators to tackle financial crime and fraud, including investment fraud.” Lloyds and Barclays have been contacted for further comment. How to keep your money safe To keep your cash safe, it’s a good idea to be on alert for any investment or savings schemes promising unusually high or ‘guaranteed’ returns. You should be especially wary if it’s a company you have never heard of before. The FCA warns that the promise of high or fixed returns can be a sign of a scam, especially if the risks aren’t clear or are downplayed. Before handing over any money, it’s a good idea to check whether the company is regulated by the FCA by using its ‘firm checker’ tool. The regulator also puts out warnings about unregulated companies it is concerned about, so it’s worth checking if the firm you are looking at has been mentioned. Crucially, don’t rely on a website or contact details provided by the company itself. Fraudsters can impersonate genuine firms. The FCA recommends using the contact details listed on its official company register to ensure you’re dealing with the real business. With banks, you can call the number on the back of your credit or debit card or call the number listed on their official website to verify if anything is genuine. If you are cold-called by a bank, hang up and call them back. The regulator also warns that being contacted out of the blue about opportunities can be a sign of a scam. Fraudsters may also try to put you under pressure to make quick decisions, which experts say should raise red flags. Donna Walsh, pensions expert at Standard Life, said: “Scams do not always look like scams. They can come with convincing websites, positive reviews, familiar names and paperwork that appears genuine, which is exactly why they can be so dangerous. “The best protection is to pause, check independently and avoid being rushed. A legitimate pension opportunity should never depend on pressure, urgency or confusion.” Investing your money is also very different to keeping it in a regular savings account. With investing, your money is at risk and you could lose cash if markets fall, or the company you are investing in goes bust. Make sure you fully understand any risks before handing your cash over and consider speaking to a professional if you need help with your finances. Comment now