Clone firms which pretend to be FCA regulated are a growing threat to individuals and businesses of all kinds.

In recent times we’ve become used to the regular statements from the FCA warning about a so-called clone firm. Indeed, one has just popped up this morning with a clone of Fair Oaks Investment Capital.

The scam revolves around a company calling itself Fair Oaks Crypto which aims to trick investors into thinking they are FCA regulated by claiming to represent the somewhat more legitimate firm Fair Oaks Capital.

Every time the FCA makes a warning such as this, it publishes its details so people will know to avoid it. They also suggest checking the Financial Services Register to ensure it is legitimate. However, the problem continues, and with fintech bringing with it a host of innovations, problems are likely to grow.

Even the biggest companies are not immune. Last year the FCA highlighted the problem of a large Morgan Stanley Clone. In this case it was actually two companies claiming to be acting on behalf of Morgan Stanley. They claimed to be closely affiliated with the company and quoted its number.

Such a practice is typical, and can be particularly insidious in a world in which technology is encouraging greater financial innovation. The market is filling up with online platforms and other operators which offer a wide range of products to customers, none more so that the rapidly growing cryptocurrency and online trading market place.

Both feature companies which might be little known and promise to offer easier ways for customers to access a range of financial services, but that lack of familiarity inevitably puts customers on their guard. Being able to quote genuine details from recognised and reputable firms is a quick and easy way for firms to gain the trust of their targets.

A growing problem

Cloning is nothing new. Fraudsters have been using a variety of tactics to adopt the look and feel of recognised and trusted companies for some time. For example, think of the phishing emails which claim to come from a well known bank. However, improving technology and the evolving financial markets all give fuel to their efforts.

Fraudsters can create well designed emails which convincingly mimic the branding and style of the cloned company. They can include links which take targets through to websites which also look and feel familiar. The fraud is becoming much more common and more difficult to spot.

The emerging cryptocurrency environment threatens to create a Wild West environment in which these clones can play. It is new, it is unfamiliar, but at the same time benefits from an enormous amount of hype. People are interested in getting involved and are receptive to any platforms which appear to make this easy.

The FCA is working on ways in which to regulate the cryptocurrency space, but while it does so there is a risk of a gap into which fraudsters can be simply slot themselves.