Savers at risk as firms use misleading marketing practices
When the consumer group searched the internet for popular savings terms, such as ‘best cash ISA’, the searches returned numerous examples of high-risk investment products, many of which promised high fixed returns, with no mention of risk.
A number of these were paid ads, which appear at the top of Google’s results page.
Worryingly, two deals were from companies unknown to Which? and who the consumer group did not get a response from when it tried to contact them for more information.
When Which? showed a group of consumers a selection of these ads, more were interested in investment products promising generous “asset-backed fixed returns” than those promising decent returns but clearly stating savers’ capital was at risk.
According to Which? research, two-thirds of people with a cash savings account conducted at least some research online, with nearly a quarter using a search engine to explore their options. A third of savers were most driven by interest rates when choosing their latest savings account.
The Which? findings follow the collapse of London Capital & Finance (LCF) in Janaury, which saw almost 12,000 people lose £236m. Many of these people were attracted by high returns on offer and were reassured because the firm was authorised by the Financial Conduct Authority (FCA) and wrongly believed mini-bonds had been vetted by the financial regulator.
Which? believes consumers need much greater clarity about the risks involved when investing in unregulated products, and that more needs to be done to tackle misleading marketing practices that downplay these risks.
Jenny Ross, editor of Which? Money, said:“It’s concerning to see that despite thousands of savers losing millions as a result of risky, unregulated investments, savers are continuing to be confused and misled as a result of ads omitting crucial information about risk.
“Firms offering unregulated products need to be much clearer about how they differ from cash savings accounts, specifically in the level of risk involved – if they fail to do so, the regulator and government must be prepared to take strong action.”