Financial fraud cases spike during 2013

Published:  24 Jan at 6 PM
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Tagged: Australia, Money
In spite of the worldwide financial chaos caused by the casino culture in Wall Street, the City of London and other bourses, large-scale financial fraud is still ongoing across the sector.

According to a survey by a highly-respected audit and accountancy firm in London, fraud across the industry cost investors £532 million in 2013, a 12 per cent increase on the previous year. Harsher crackdowns by regulators and an emerging willingness to report white-collar crimes are uncovering more wrongdoing than in the past in a sector which has become a byword for financial scams.

Since its inception in April last year, the newly-named Financial Conduct Agency has received over 1,000 reports of suspected insider trading, sent in by building societies, banks and advisory businesses. The FCA has recently been busy uncovering other instances of fraud carried out by financial advisory firms, and is publicising regular warnings on its website.

Expats investing overseas are at even more risk of being scammed, as there is no recourse in most destinations against illegally operating IFA firms and individuals. Bangkok is famous for its ‘boiler room’ cold calling scams, and IFA companies in the city and other Thai expat hubs have been associated with the failed ‘Football Fund’, the LM Australia fiasco, the London Nominees CTA crash and more.

It’s not unusual in expat destinations for an IFA firm to change its name after a crash, with checking online any new firm's directors’ and CEO’s names a wise precaution. Expats are also advised to watch out for the insertion of high-risk funds into so-called balanced portfolios, particularly if they have requested low-risk investments with lower returns.

High commissions and charges are another minefield in which inexperienced investors can see their savings explode into nothing, and are rarely explained in detail by IFAs eager for their rewards from the product provider. Insisting on a clear, detailed explanation can save a lot of money.
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