The UK's Financial Ombudsman Service (FOS) has reported increased financial scams, especially those related to cryptocurrencies. FOS said that there was an increase in complaints involving 'hybrid' or more than one type of scams.

The latest data shows that in the 2022-2023 financial year, the FOS received 21,918 fraud and scam complaints. The figure represents an 18 percent increase from 18,450 cases reported in 2021-2022. Furthermore, FOS reported that almost half of the complaints were related to online payments.

Rising ‘Hybrid’ Scams

FOS, which settles complaints between financial institutions and the consumers, also observed that 'hybrid' scams have become rampant and involved a combination of romance, purchase and 'safe account' scams. In light of this, FOS noted that banks should consider the latest trends in their fraud prevention measures.

More people seeking the services of FOS were getting favourable responses, FOS said. It added that the uphold rate, which shows how often it agrees with consumers, came in at 35% for financial products and services, standing above its average. In addition, the uphold rate for fraud and scams was 45% while that of online payment scams was above 50%.

Commenting on FOS' report, William Christopher, the Civil Fraud Partner at law firm Kingsley Napley, told Finance Magnates that most investment scams were usually done by online platforms purporting to generate huge returns for their investors. In reality, the scammers do not generate any profits but instead steal from their victims.

"However, there are steps that can be taken via a civil law route such as obtaining freezing injunctions and search orders, so it is certainly worth considering such, especially where losses are sizeable," Christopher explained. "Fraudsters thrive on the idea that they are beyond the law, but that need not always be the case."

UK Strengthens Regulations

Meanwhile, in a separate report, the Financial Conduct Authority (FCA) said at the beginning of the month that it was finalizing regulations regarding cryptocurrency marketing and advertising in the UK. The new rules are expected to take effect from October 8.

According to a document published by the regulator, the regulations will categorize cryptocurrencies are 'restricted mass market investments'. Furthermore, they will compel cryptocurrency companies to conduct adequate due diligence for cryptocurrency services to be advertised. This is to ensure that financial promotions are 'fair, clear and not misleading'.

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