If it’s too good to be true, then it probably is!
Like most things in life, if it ‘sounds too be good to be true’, it probably is. However, the attraction of high interest rates on cash deposits is often enough to catch out unwary savers. With interest rates at all-time lows, headline rates of up to 9% look very attractive, especially if advertised with no risk.
Clients browsing the Internet looking for the best Cash ISA rates may find websites using quirky graphics and the usual industry jargon to advertise ‘fixed rates of return’ up to 9%. This is quite incredible, considering the fact that most Cash ISAs currently pay around 1%. A quick look at Google uncovers other sites offering double-digit returns, others pledging investment opportunities in the ‘alternative market’. More worryingly, these firms claim to be regulated by the City watchdog, The Financial Conduct Authority, or to have the protection of the Financial Services Compensation Scheme.
The Times recently monitored these sites over a fortnight and found that company names coming up in the ‘top rate’ ISA searches were completely unknown, some using postal addresses or deserted shop fronts. The paper went onto report these companies to Google. Whilst these companies’ adverts were taken down, they reappeared soon after.
One such site, Club ISA, persistently re-advertised, despite efforts to remove it from Google. Another website, Compareisaonline. com, managed to nestle itself between adverts for Martin Lewis and respected advice sites like Money Saving Expert and a well-known bank. When contacted by phone and asked about these schemes, the replies were less than clear, with unconvincing answers such as, ‘Our investments are asset backed’ and, ’We ensure the assets of the company far outweigh the liabilities.’
As an occasional user of Twitter myself, I saw an online advert specifically aimed at Cash ISA investors, offering extremely attractive rates of interest. Disturbingly, when contacted, the ‘adviser’ continually mentioned the advertised rate of interest rate, but with no credible explanation as to how this rate was achieved. He persisted with our conversation even after I informed him of my occupation as a qualified Financial Planning Consultant and reference to the Financial Conduct Authority regulation!
According to statistics by The Times, earlier this year, scams such as these on social media had conned savers out of £4.4 million. With neither Internet providers, such as Google, nor the Financial Conduct Authority saying it has the power to take down sites that advertise rates highly unlikely to materialise, it is down to savers and investors to be on their guard.
If you have cash-based investments and are interested in providing improved returns, this will inevitably involve some level of risk. However, by speaking to a qualified, regulated independent financial adviser, they will understand your long-term objectives, assess your risk profile (including your tolerance around losses), and provide you with an appropriate investment solution.
We take the time to explain things so you have a very clear understanding and will, if you wish us to do so, regularly review these investments to ensure they continue to meet with your objectives and risk profile.
According to statistics by the times, earlier this year, scams such as these on social media had conned savers out of £4.4 million.