FMA sounds off on investment scams

FMA sounds off on investment scams | Insurance Business New Zealand

Insurance News

FMA sounds off on investment scams

Nearly $200 million lost to fraudulent activity in the past year

Insurance News

By
Kenneth Araullo

In light of Fraud Awareness Week 2023, the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – is urging New Zealanders to exercise caution regarding investment scams.

This year, the focus is on educating consumers to recognise and avoid falling prey to such fraudulent activities. Recent data from the Ministry of Business, Innovation, and Employment (MBIE) reveals that Kiwis have lost nearly $200 million to scams in the past year.

In a news release, the FMA has noted a marked increase in investment scam incidents targeting New Zealanders since 2020. Over 1,300 complaints have been lodged with the FMA, resulting in 373 warnings issued against investment scams. Predominant among these are fake investment prospectuses and deceptive term deposit comparison websites. These increasingly sophisticated scams have not only affected novice investors but also those with significant investment experience.

The FMA has also expressed particular concern about the rising number of scams targeting vulnerable communities in New Zealand and the use of social media platforms to advertise fraudulent investment opportunities.

“Scams and fraud are financial crimes that cause terrible harm to individuals. Preventing these crimes is vital to support confidence in our markets and financial services,” said Peter Taylor, FMA director of specialist supervision and response and senior responsible officer for scam prevention and coordination. “This week is an important moment to raise awareness around the impacts of fraud and the ways to protect yourself. The FMA raised this issue to the top of our agenda this year and recently the heads of the Council of Financial Regulators agreed that FMA should take a lead role in developing a system wide response to this scourge.”

How can Kiwis avoid investment scams?

The FMA also shared guidance on identifying and avoiding scams. Key advice includes verifying the legitimacy of the company, seeking second opinions before financial commitments, recognizing that real investment opportunities are usually not unsolicited, and being cautious with personal information and funds. The FMA stressed the importance of due diligence and listening to any concerns raised by banks regarding transactions.

New Zealanders are encouraged to use the FMA’s online resources for further information on protecting themselves against investment scams. The FMA regularly updates its social media channels with public warnings, scam education, and safety tips.

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