FCA/FSCS study: Brits not researching their investments because it’s “time consuming”
The UK Financial Services Compensation Scheme (FSCS) and the Financial Conduct Authority (FCA) reveal that of the 37% of UK adults who hold investments of between £100 and £50,000, almost half (44%) wished they’d spent more time researching their investment before making a decision, but do not do so because it’s “time consuming”, or “too complicated”.
The new research, which explores Brits’ attitudes towards investing, showed that when asked which tasks consumers spent the most time on, choosing a holiday (31%), buying a house (26%), doing laundry (24%), buying a car (24%) or checking social media (19%) were ranked as the top five choices. Researching investments was not as high up the list.
In fact, two in five (40%) of those who have made financial investments said they wished they’d spent longer doing so. This, raises concerns around the potential risks consumers can face, including investment scams, if they do not know where they’re investing their money.
The findings also revealed that from those adults that held investments, more than a quarter (27%) said they were more likely to invest in an “investment opportunity” with a limited time frame, such as “being only available for the next 24 hours”. With time pressure being a common tactic used by scammers, the FCA advises checking the FCA Warning List to see if the investment firm is operating without authorisation.
Alarmingly, 22% of respondents say they have not checked or do not know if their investment is FSCS-protected, putting them at risk of choosing investments with no possibility of compensation if something were to happen to the investment platform/provider. FSCS protection means that consumers can claim compensation of up to £85,000 against an FCA authorised firm that has failed.
The new data builds on FSCS and the FCA’s efforts to educate consumers on the importance of making informed choices on safe investing. With the launch of FSCS’ new online tool, the Investment Protection Checker, consumers are now able to check whether their investment is protected – and familiarise themselves with fraudsters’ tactics by checking the FCA’s ScamSmart page.
Additional findings from the study include:
- More than one in 10 (11%) of those Brits who have made a financial investment said they invest because their friends are investing, with 26% saying they find it “fun”.
- 14% of Brits who have made a financial investment stated they chose their investments because they were promoted by a celebrity or influencer via social media.
- Brits aged between 18 and 24 who have made a financial investment were more likely to invest while watching TV/Netflix (13%), at the pub (11%), or coming back from a night out (7%) compared to those over 25.