Last year, the Financial Services and Markets Authority (FSMA) received 1,710 messages from consumers about various financial matters. That is an increase of 13 per cent compared to 2016, during which year the FSMA recorded 1510 questions and complaints.
Nearly half of the messages were questions or complaints relating to fraud and unlawful offers of financial products and services. There were 792 such messages in 2017, up by 45 per cent compared to the previous year.
The messages reporting fraud or unlawful offers mainly concerned binary options, boiler rooms, pyramid schemes and ‘phishing’. New topics in 2017 included credit fraud, virtual currencies and fraud with investments in diamonds.
The increase is due in part to the growing number of warnings issued by the FSMA about fraudulent activity. Consumers asked questions about the warnings or reported having been victims of fraud. The implementation of the ban on distributing certain derivatives to retail investors also gave rise to additional consumer questions.
‘Increasing numbers of consumers are finding their way to the FSMA. That is a positive development. The more information we receive, and the more quickly, the better we can warn consumers so as to ensure they do not become victims,’ notes Mr Jean-Paul Servais, chairman of the FSMA.
If the FSMA identifies fraudulent activity, it informs the judicial authorities and publishes a warning to alert consumers of the dangers of a particular offer. The FSMA also notifies foreign supervisory authorities.
The FSMA published 116 warnings last year. That figure is 70 per cent higher than in 2016. The FSMA issued 46 warnings about boiler rooms, and 42 about fraud with binary options. It issued its first ever warning about alternative investments, fraud with investments in diamonds and fraud with initial coin offerings (ICOs).
The FSMA asks victims of fraud to always report the incident to the local police. This way, the judicial authorities have the necessary information to take action against the fraudsters.
The FSMA asks consumers to contact it should they have the least doubt as to the lawfulness of a financial offer. A consumer contact form is available on the FSMA website for the purpose.
Number of messages:
More information about fraud and unlawful offers is available on the website of the FSMA.
How to prevent investment fraud?
- Always verify the identity of a company offering you financial services. If the company cannot be clearly identified, it should not be trusted. Gather reliable information online. Be wary of positive testimonials. They may be fake.
- Do not accept uncritically the information provided by companies. Insist on clear and understandable information. It is not uncommon for a company to claim to be authorized to offer financial services although this is not the case.
- Check whether the company holds an authorization or registration. You can do so by searching the lists available on the FSMA website. Under the consumer’s section of the home page, you can conduct a search via “Check your provider”. You can also consult the list of warnings.
- Be wary of cold calling. If you receive an unsolicited financial offer by phone, email or social media, be careful. Such contacts are often the first step towards a fraudulent practice.
- Be wary of completely disproportionate returns. Fraudsters frequently present significant earnings … until the day when the investor asks to withdraw the funds invested. If the promised returns seem too good to be true, don’t believe them.