It wasn’t long ago that investing was reserved for the privileged few. Thanks to the internet, more people are trading and investing than ever before. This means that more people can enjoy the opportunity to make some extra money on assets that may increase in value.
However, one of the major downsides of increased trading activity is mis-sold investments. Often these involve outright fraudulent practices and can cost consumers millions. What can you do if you have trusted a broker that is not reliable or have lost your principle in mis-sold investments? It is essential to file a complaint and seek fund recovery assistance.
MyChargeBack UK professionals are well-versed in the fund recovery process. We consult with clients and assist them in gathering evidence and presenting a claim. We have extensive experience working with chargeback and fund recovery claims and are familiar with how regulators and banks deal with these cases. Our expertise can improve the chances of fund recovery.
The Problem of Mis-Sold Investments
There are, fortunately, many honest, regulated brokers that provide value for clients. Sadly, however, the number of unlicensed brokers that make false promises and engage in exploitative practices is increasing.
For instance, the Financial Conduct Authority (FCA) noted that broker clone frauds rose by 29% in just one month. Clone schemes involve an unlicensed broker taking a similar name, graphic design and website content to that of a regulated broker to deceive prospective clients. Each type of scheme can rob tens of millions of pounds from British traders.
The FCA often issues warnings as a public service to keep consumers safe from mis-sold investments. However, these schemes keep multiplying faster than regulators can raise the alarm about them. It is vital, therefore, to learn how to recognise the difference between legitimate trading opportunities and mis-sold investments and to take precautions.
Types of Mis-Sold Investments
The increase in mis-sold investment schemes online is enough to make some people wary of trading at all. However, there is no need to avoid online trading entirely and miss out on lucrative opportunities. Recognising the various false schemes out there and avoiding pitfalls can keep you and your money safe. The following are common tactics used for mis-sold investments:
- Pushing unsuitable investments
- Seeking out traders who are financially vulnerable
- Making false or misleading statements about the investment
- Not abiding by promises or conditions
- Withholding client funds intentionally
- Ceasing communication with the client and keeping the money
The Roman saying ‘caveat emptor’ or ‘let the buyer beware’ may hold true, but that doesn’t make deceptive practices alright. A broker may not feel that they bear any personal responsibility for client losses, but it is important that brokers avoid harming them financially. Intentionally pressuring a client to engage in an investment that is not suitable can be an example of a mis-sold investment.
For instance, if septuagenarians want to use their pension money to speculate on cryptocurrency that may seem like their business, but it would be harmful to encourage and pressure them to do so. Most regulated brokers provide advice that, at the very least, will not harm the client. Mis-sold investments occur when brokers are heedless of these concerns.
In a similar vein, an unregulated broker will typically not only refuse to warn a trader from doing something financially destructive, but will actually seek out people who are financially vulnerable and are willing to take huge risks to make money fast. This occurred often during the worst months of the pandemic.
During the COVID crisis, people were out of work, at home in front of their computers and searching for ways to replace a lost income. Unscrupulous brokers offer promises of huge returns which turned out to be just a way of encouraging them that it would be worth it to deposit their last paycheck to trade a new cryptocurrency or forex.
Sometimes brokers go farther than pressuring desperate people and can make misleading statements about the investment. These do not have to be outright lies to be unethical. For instance, they may claim that their service is licensed when in fact it once had a licence that was revoked. A broker may guarantee daily returns based on the one-time performance of only the most successful trader. These claims can trick people into investing and losing their money
A broker should not promise or guarantee returns, particularly with high-risk trading products such as forex or cryptocurrency. In some cases, a broker may not abide by their own conditions, such as a withdrawal policy, and can claim that the rules are different in the clients’ case. Often these rules aren’t written down and the customer may be at the mercy of a broker who holds their money.
In these cases, the brokers can in effect hold the money hostage and will only release it with the promise of more money and new deposits. In some cases, the broker will disappear and will shut the client out of their account. The money, however, will be gone.
How to Avoid Mis-sold Investments
One of the best ways to avoid mis-sold investments is to work with a regulated broker and do not settle for a second-rate licence. In the UK, the FCA is the gold standard of financial licences and provides extensive oversight over any broker who bears their licence.
Research brokers well before signing up, ensure that all of the information is up to date, and be ready to file a complaint if something does not go as expected.
How Can Fund Recovery Help?
If you have noticed unauthorised charges or if your broker is uncooperative or disappears, it is important to seek fund recovery help. MyChargeBack UK is staffed with experts who understand regulators and banks and can negotiate your position. We have the resources, knowledge and tools to improve the odds of getting your money back.
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