Clone firm scam: ‘I was conned out of £60k’

We talk to a man who lost more than £60,000 to clone firm scammers. We reveal how the con works, how the victim got his money back and top tips to help you stay safe if you’re targeted.

Fraudsters can trick people out of their cash by pretending to be from, or mimicking, an established financial services company authorised by the Financial Conduct Authority (FCA).

These fake companies are known as clone firms.

According to the FCA, a clone firm tends to cold call people to promote ‘shares, property or other investment opportunities that are non-tradable, worthless, overpriced or even non-existent.’

We reveal how one man was targeted by a clone firm, how he got his money back and what the FCA is doing to clamp down on the terrifying practice.

When Mark (the victim’s name has been changed for anonymity) received several calls about fixed bonds and gilts, he wasn’t surprised as he entered his details into a comparison site* when he was looking for better returns.

Editor's note: Mark can't recall the name of the site in question but suspects this is where the scammers obtained his details.

He was put off by volatility in the stock market last year as the coronavirus pandemic resulted in prolonged lockdowns worldwide and widespread uncertainty.

Due to the situation, Mark decided to move thousands of pounds from a Stocks & Shares ISA to an arguably safer investment – fixed-rate bonds and gilts.

“I thought I would put my money somewhere else,” said Mark, who researched different bonds via a comparison site, which is no longer active.

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‘They didn’t pressure me’

When Mark received a few calls from some companies offering fixed-rate bonds, he decided to talk to the FCA and even checked its register.

“It all seemed good,” he commented.

“They [the scammers] said they charged 1% in fees in the secondary market – thinking about it now, maybe that was too low."

The fraudsters didn’t offer any incentives but did offer a chat with the ‘compliance team’ to check that he was happy for the deal to go ahead.

Mark was also asked to send a picture of his driving licence and utility bill, and even had a login and password set up with the clone firm to view his investments, adding some authenticity to the scam.

He waited a few weeks while he talked to scammers at the clone firm, who said they were from ML Capital Asset Management, about what they offered and checked they were on the FCA register.

ML Capital Asset Management Limited was on the official register at the time of publication (August 2020) but has since been rebranded to Montlake.

Montlake Asset Management Limited can be found on the FCA register and is regulated in another European Economic Area country (like ML Capital Asset Management Limited also was), according to the FCA.

“I thought about it for a while – they didn’t pressure me in any way,” revealed Mark.

Fraudsters tend to pressure people into acting quickly without thinking, so this is an unusual tactic on the part of the scammers.

No scam warnings

There were no warnings about 'ML Capital Asset Management' on the FCA register when Mark checked, and the scammers tried to appear legitimate by sending over documents with its rates and by using a ‘compliance team.’

So, Mark decided to put some money into a Lloyds bond and a gilt, which offered 6.75% and 6% interest, respectively.

Unfortunately, these rates were too good to be true as savings rates have fallen during the pandemic. For example, one of the top three-year fixed-rate bonds at the time of writing offers 1.81%.

When Mark called his bank, Santander, to transfer £30,000 for the Lloyds bond at the beginning of June 2020, he was asked whether he was sure of the transaction and whether he checked the FCA register.

There was no suggestion from Santander that he might have been targeted by scammers.

“I wouldn’t have just ignored it if clone firms were mentioned,” said Mark.

Clone firm investment scams: how they work, how to spot them and stay safe

Clone firm exposed on the FCA register

Two weeks later, he transferred £32,000 to a different bank account via Santander and was asked by the bank to confirm the recipient details.

When Mark asked the clone firm why he had to send money to a different account, he was told a different person dealt with this product. 

Unfortunately, he received a nasty shock when ML Capital Asset Management was added to the FCA register in late June 2020 and was flagged as a clone firm.

The only difference in the name compared to the legitimate firm at that time was the use of ‘limited’ at the end.

But it was too late for Mark to act as he already transferred £62,000.

When he suspected that he may have been scammed, he contacted Santander and a few days later, got in touch with loveMONEY.

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What happened?

We got in touch with Santander, stressing how Mark did his research to try and avoid getting scammed.

Also, we flagged that the bank could have done more to warn Mark about the possibility of clone firms posing as genuine, regulated companies and how the scammers acted unusually.

Santander was extremely quick to investigate Mark’s case and refunded him £62,000 in less than 24 hours.

“Santander has the utmost sympathy for Mark and all who fall victim to the criminals who carry out these scams,” commented a spokesperson for Santander.

“Having reviewed Mark’s claim, we can confirm that we have provided a full refund of £62,000.”

We also got in touch with the FCA about what happened. While they don’t comment on individual cases, they did issue a statement.

“Last year [in 2019], the FCA received over 20,300 reports of potential unauthorised business activity from consumers, firms, and other sources,” commented a spokesperson for the FCA.

 “We analyse and assess all of these reports. Last year [2019], we published 522 warnings about potentially fraudulent firms.

“Before we publish a warning about a cloned firm, we must be certain that the information we publish is accurate.

 “We would be interested to hear from any consumer who has lost money as a result of this scam.

“If consumers are unsure about a firm, they should check on our register and contact the firm on the details provided to verify that they are dealing with the regulated firm.

“They should also check our ScamSmart pages.”

How to stay safe

If you want to avoid getting scammed by a clone firm, compare the rates on offer with those included in best buy lists and tables by trusted sources such as loveMONEY and MoneySavingExpert.

If the rates vary significantly and look too good to be true, don’t transfer any money as it’s likely to be a scam.

As the FCA mentioned above, check this register to make sure the company in question is authorised – don’t use links in emails to access the register as they could be fake.

Of course, as in Mark’s case, there’s a chance that a clone firm hasn’t been flagged by the FCA yet.

The FCA recommends verifying the identity of an authorised firm by asking for their FRN and contact details. You should always call them from the number on the register.

If there are no details or they are out of date, call the FCA Consumer Helpline on 0800 111 6768.

There are some flags the FCA has mentioned that could help you identify a clone firm.

For example, if a scammer gives their own phone number or uses different contact details to the site they directed you to (which could be a genuine firm), you may be dealing with a fraudster. 

Clone firm investment scams: how they work, how to spot them and stay safe