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FCA: we have seen a rise in scams inside DFM portfolios

FCA has warned it has seen an increase in scams being placed in DFMs portfolios

FCA: we have seen a rise in scams inside DFM portfolios

The Financial Conduct Authority (FCA) warned it has seen an increase in scams being placed in discretionary fund manager (DFM) portfolios.

Over the past couple of years, there have been a number of high-profile collapses of DFMs, many of which held investments in illiquid assets. In many cases, these failures led to Financial Services Compensation Scheme pay-outs.

Today in its business plan the regulator again warned many scams are being hidden in DFMs’ portfolios.

‘We have seen evidence of an increase in wealth managers’ discretionary portfolios being used for pension scams, and poor conduct from wealth managers who make unsuitable investments in high-risk assets for their clients. Our activities will improve our ability to prevent or reduce harm in this area,’ the regulator said.

In 2017 it published a similar warning that said scams are evolving to be disguised as corporate bonds held in DFM portfolios.

The FCA also said today it will continue to review advice firms that are providing advice on high-risk investments. This will remain a concern for the regulator.

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