The Financial Conduct Authority (FCA), which oversees the UK’s financial markets, today issued warnings against another two firms. Both CMD Acquisitions and Financial Strategy Holdings t/a New Trade FX have been sanctioned for providing financial services or products in the UK without the requisite authorisation.
CMD Acquisitions is believed to be connected to a previously blacklisted company, CNB Acquisitions Inc. Both companies are domiciled in London.
FCA points out that such unauthorised firms are potentially connected to share fraud scams, which cheat UK investors out of as much as £200m each year. Its website describes the intricate tactics employed by scammers, which generally involves cold calling investors and offering them “worthless, overpriced or even non-existent shares”, promising high returns.
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Often with a sense of urgency around making a decision to invest, such scams go to great lengths to convince unsuspecting investors of their legitimacy – such as media advertising, the provision of research reports, free gifts and discounts.
Indeed, all firms offering regulated financial service activities in the UK must be authorised to do so by the FCA. For smaller firms, such activities would usually include intermediaries selling investments and/or home finance activities and/or general insurance, while a fuller list of regulated activities can be found on the FCA website.
The requirement allows FCA to protect consumers through adequate monitoring of financial service providers. An important requirement for authorisation is that firms safeguard the funds received from customers for payment services, keeping them separate from the company’s assets.