Wealth management and Financial Planning firm Quilter has called for new legislation to protect consumers from the dangers of online investment scams.

It has urged the government to consider including financial scams within scope of their forthcoming Online Harms legislation.

It said this will ensure that search engines and social media platforms are given legal responsibility for preventing scams from appearing on their sites.

It would also mean a new duty of care to ensure they react quickly to brand impersonation scammers and prevent them from causing further harm by leaving the scam adverts online. 

Quilter also released analysis of the FCA's warning list which showed that 401 impersonation scams have been reported by the FCA this year, and scams involving an impersonation made up 45% of all FCA warnings issued since 2015.

Impersonation scams involve criminals setting up copycat website 'cloning' or 'impersonating' well known and trusted financial brands.

So far in 2020, the FCA has issued 1,031 general scam warnings involving individual attempts to defraud consumers, an 80% increase on 2019.

There is no legally enforceable system for compelling search engines and social media platforms to remove fake websites and fake adverts which use the ‘clone’ of a financial services firm.

Debbie Barton, financial crime prevention expert at Quilter, said: “It used to be relatively easy to spot a scam coming from a mile off. This could have been a suspicious call saying you have won a prize, or a dubious text from HMRC saying you are due a tax rebate.

“But now modern technology has allowed scammers to become much more sophisticated in the methods they use to entice their victims, and we are seeing more and more scammers stealing the brands of well-known financial services firms to trick people into parting with their cash. It is becoming much harder to spot the difference and separate fact from fiction.

“These scams are becoming increasingly prevalent, and just under half of all scam warnings reported by the FCA since 2015 involve the impersonation of a financial services firm.

“Every year, more people are using the internet in their daily lives, and while the use of search engines has increased considerably, the rules governing how investment products are advertised on these platforms have remained stationary, and consumer protection is lacking.

“This is why we are calling on the government to act to create a legally enforceable system to prevent search engines and social media platforms from hosting scam adverts on their sites, and to force these online platforms to act quickly by removing suspected scams as soon as they are notified. This can be achieved through the Online Harms legislation scheduled to be introduced to Parliament next year."