The emotional toll of fraud and how a financial adviser could protect you from scams

In February 2024, BBC news presenter Peter Levy fell victim to a scam when he received a call from an individual claiming to work for his bank. They warned of suspicious activity on his account and encouraged him to share sensitive log-in details over the phone.

Once they gained access to his account, the scammers stole a significant amount of money. Fortunately, Levy realised what had happened right away and contacted the bank, who helped him get his savings back.

However, even though he recovered the funds quickly, the experience still had a lasting emotional impact on him, and this is an aspect of fraud that you might not have considered.

According to the BBC, Levy said he felt “ashamed and embarrassed” about the incident. He also reported that he “didn’t sleep at all for two nights and after that, for a fortnight, it was very hard”.

As Money Week reports that fraudsters stole £3.2 million every day in 2023, it’s important that you’re aware of the potential dangers and consequences of financial scams.

Read on to learn about the emotional toll of fraud and how a financial adviser could help you avoid becoming a victim of scams.

60% of victims report that fraud has a negative effect on their mental health

When you consider the effects of a scam, you’re likely concerned about losing wealth and how this might affect your ability to work towards your goals.

Fortunately, new rules that came into effect on 7 October 2024 mean that banks must refund most victims of authorised push payment scams – also known as bank transfer scams – within five working days. This is the case unless you’re considered to have been “grossly negligent”.

As a result, falling victim to a scam could be less likely to have a lasting effect on your financial plan in the future as you might be able recover your wealth quickly.

Yet, it’s still important to be cautious as a new survey from Which? revealed that scams could have a significant effect on your mental wellbeing, even if the financial loss isn’t that great.

Which? surveyed victims of fraud who had lost relatively small amounts – 50% of respondents lost less than £200, while only 6% lost more than £5,000.

Despite this, 71% said the experience had a negative effect on their stress levels, while 60% reported problems with their mental health. In comparison, only 50% reported that the scam had affected their financial situation.

The survey also found that these negative feelings may last a long time. For example, fraud victims reported higher levels of:

  • Finding little pleasure or interest in doing things
  • Feeling down or depressed
  • Having trouble sleeping
  • Feeling tired and having little energy.

So, even if you’re able to claim your money back or you only lose a small sum, falling victim to a scam could have a lasting effect on your mental health.

It’s also important to remember that the new legislation won’t necessarily cover other types of fraud, such as social media investment scams. This means you could still lose a large amount of wealth to scams.

Fortunately, there are three ways working with us could help prevent this.

How working with a financial adviser can help protect you from fraud

1. Setting clear financial goals

Having clear goals could help you prevent fraud as it encourages you to think carefully about your decisions and may discourage you from making impulsive changes to your financial plan.

For instance, imagine somebody contacts you on social media, offering an amazing investment opportunity that will double your wealth in a year.

This may sound enticing, yet when we review your financial plan with you, you might see your current long-term investment strategy is already generating enough growth to meet your goals.

By remembering your goals and following your financial plan, you can stay on track and resist the temptation to make sudden, uninformed choices that could make you vulnerable to fraud.

2. Performing due diligence on investments

There may be times when an adjustment to your investment strategy is needed, for example if your goals or circumstances change. As financial advisers, we have access to software that assists in the due diligence of investment funds by providing access to information that isn’t freely available. Combined with our expertise and experience, this ensures that the investment will be suited to your needs and prevents you from becoming exposed to scams making bogus claims about performance. Equally, we’ll carefully select investments that align with your unique goals and attitude to risk.

3. Advising on switching your pension arrangements

You may want to switch your personal or workplace pension savings to a new scheme for several reasons such as reducing the fees you pay or accessing different fund options. In this instance, it’s important to protect yourself against pension scams.

In August 2024, PensionsAge reported that one in seven UK adults had been targeted by pension scammers in the past year. These individuals often promise significant investment returns or very low fees, encouraging you to move your savings into a fraudulent scheme.

For example, if you receive unsolicited contact from somebody offering an incentive for moving your savings, a pension switch may not be suitable. After all, you weren’t considering a switch until they contacted you.

As financial advisers we will analyse whether a switch is suitable for you in the first place. Pensions are complex products and a full investigation into the features and benefits of your existing scheme is essential to ensure you don’t miss out on any important guarantees or get hit by a hidden penalty by switching.

By taking appropriate advice you will ensure that if a switch is required then the new pension scheme will be the right one for you and your needs, and you don’t run the risk of falling victim to a scam.

Fraud could have a lasting effect on your mental health as well as your finances but with long-term financial advice, you can reduce your chances of falling victim to a scam.

Get in touch

If you want to explore ways to protect your wealth, we can help.

Emailhello@fcadvice.co.uk or call 0333 241 9900.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term (minimum of 5 years) and should fit in with your overall risk profile and financial circumstances.

Are you retirement ready?

Svg%3E