UK wealth manager Saltus released new research this week revealing that over £118 billion ($146 billion) has been lost to criminals in the UK through financial scams. Wealthier people more likely to be targeted, demonstrating the need to improve cybersecurity.

The latest Saltus Wealth Index Report shows that 51 per cent of people in the UK have experienced a financial cyber crime, rising to 67 per cent among high net worth Individuals. This is an increase of 14 per cent compared with nine months ago.

Saltus surveyed more than 2,000 people in the UK, with victims losing on average £9,094 ($11,270), the equivalent of £118.3 billion. The data also reveals that the wealthier somebody is, the more likely they are to be targeted by scammers. 

Amongst those with investable assets of less than £250,000, over a third said they had been a victim, and only half got their money back, the survey reveals. The likelihood of being targeted – and losing the money – gets higher the wealthier an individual is, with 73 per cent for those with assets of more than £1 million having been scammed, and 55 per cent of those did not get their money back.
 
Furthermore, wealthier people who fall victim to scams also lost the most, with victims with a net worth of more than £1 million losing almost £13,000 on average – almost four times as much as people with a net worth of less than £50,000, the survey found.
 
This demonstrates the need for the wealth management industry to step up on cybersecurity. In the US, new Securities and Exchange rules are due to come into force this spring, making listed companies report their cyberattacks to core stakeholders, such as investors and regulators. At present, 85 per cent of such cyberattacks are unreported by organisations because businesses fear a loss of confidence from the public.

Saltus said it has also seen a rise in scam attempts in the past year amongst its own clients, and warned that the current low return environment provides criminals with even more opportunity to target wealthier individuals, with a trend for scammers to use the promise of getting higher than market returns to falsely draw investors in.
 
These types of scams vary, ranging from a simple scam, such as an offer to invest in crypto or a single market, or a more complex scam, such as setting up an unregulated company, receiving an investment into it, then removing the funds and closing the company.

Consumer Duty
Additionally, Saltus believes that the Financial Conduct Authority’s new Consumer Duty, which sets higher standards of consumer protection across financial services, could be exploited by criminals. “This move by the regulator to protect consumers and clean up financial services could actually provide more opportunities for scammers,” the firm said in a statement.

Scams to watch out for might include being contacted by firms purporting to be the FCA investigating a company for failures under Consumer Duty, for which they may be entitled to compensation. Alternatively, scammers might contact consumers, pretending to be their bank, financial advisor or other business they work with, and ask them to provide personal details in order to confirm their records are correct as part of a Consumer Duty review. 

This type of scam was seen during the Covid-19 pandemic, with firms impersonating NHS Track and Trace or the vaccination roll-out. A scammer may also offer a service to review a client’s position for a fee, only to then defraud them of that fee, Saltus continued.

Mike Stimpson, partner at Saltus, said: “Given half of us have been victims of scams, with many of us losing money, it can be very difficult to tell when you are being targeted, so do remain vigilant at all times and, if in doubt, seek advice.”

“The golden rule is – if it seems too good to be true, it probably is. Always check the authenticity of anyone offering an investment opportunity, and never contact a firm from the details it provides you – do your own independent research,” he added.

“We all know that professional advice can help you achieve your financial goals, but one of the lesser known – but hugely important – benefits of having a financial advisor is that they can also help protect you from falling victim to financial crime,” he said.

“Financial advisors know the markets, they know when something is not credible and they have your best interests at heart and, ultimately, this means they are your best line of defence when it comes to financial scams,” he concluded.