Beware of cash Isa scams

Fraudsters have been targeting savers by offering unrealistically high interest rates on cash Isas.

With the Bank of England's base rate still stuck at 0.75% it is extremely hard to find a decent return on cash savings. So when you see an advert for a cash individual savings account (Isa) paying "fixed returns of up to 9%", your head is likely to be turned. But it's a scam.

An investigation by The Times has found numerous websites advertising fake cash Isas "from those promising seemingly impossible double-digit returns to others pledging investment opportunities in the alternative market'", says the paper's Ali Hussain.

Many of the firms behind these Isas falsely claim they are regulated by the Financial Conduct Authority (FCA) or covered by the Financial Services Compensation Scheme (FSCS), which means up to £85,000 of your cash will be returned to you if the provider goes bust.

The FCA has now put several of them on its fraud warning list. What is most worrying is you don't have to go digging to find these phoney Isas. If you tap "the best Isa rates" into Google several of these dodgy firms appear at the top of the search results "nestled between adverts for Martin Lewis's respected site Money Saving Expert and Barclays Bank", says Hussain.

"All had paid to get maximum exposure from Google and so featured high up the search engine's listings." While Google removed ads reported to it by The Times, they soon popped up again.

Earlier this year This is Money reported the case of three readers who lost thousands in a fake Isa scam. "The victims deposited almost £100,000 into ABN Amro Asset Management, which touted inflation-busting Isa rates to savers, claiming to be a British arm of Dutch banking giant ABN Amro," says George Nixon on This is Money.

How to spot fake cash Isas

So how can you make sure you are putting your money into a genuine Isa? "Be suspicious of all too good to be true' offers", says Lucy Warwick-Ching in the Financial Times. The best rate available on a genuine cash Isa is 2.01% for UBL UK's five-year bond. A cash Isa offering far more is likely to be a scam.

The top rate for an instant-access Isa is 1.36% from Virgin Money, or 1.6% if you lock your money away for a year with Al Rayan Bank. To find real cash Isas stick to well-known comparison sites such as MoneyFacts, ComparethemarketMoneysupermarket or Savings Champion. If you see a great deal, check the FCA's fraud warning list to see if they are aware it is a scam.

And do some research to confirm a company has the professional backing it claims to have. You can check the FCA's register to see if a firm is authorised by them. If it is, "use the contact details on the register, not the details the firm gives you" to avoid a fraudulent "clone" of a genuine entity, says Warwick-Ching.

Recommended

For the best savings rates you can find now, forget the high street banks
Savings

For the best savings rates you can find now, forget the high street banks

If you're looking for any sort of return from a savings account, forget the high-street, says Ruth Jackson-Kirby. Here's where you'll get the best rat…
20 Nov 2020
Where to put your savings now that NS&I has cut its rates
Savings

Where to put your savings now that NS&I has cut its rates

National Savings & Investments (NS&I) has slashed its interest rates. There are now much better deals for your savings elsewhere, says Ruth Jackson Ki…
2 Oct 2020
Child trust funds are about to bring a windfall for teenagers
Savings accounts for children

Child trust funds are about to bring a windfall for teenagers

The first child trust funds are maturing in September, says Ruth Jackson-Kirby. But what should teenagers do with the money?
31 Aug 2020
How investors got burned by Chilango's burrito bonds
Corporate bonds

How investors got burned by Chilango's burrito bonds

As investors in restaurant chain Chilango's burrito bonds face losing all their money, MoneyWeek’s warning to steer clear of mini-bonds proved prescie…
3 Aug 2020

Most Popular

Jim Mellon: the world is on the brink of three major revolutions
Share tips

Jim Mellon: the world is on the brink of three major revolutions

Jim Mellon has been giving MoneyWeek’s readers lucrative ideas ever since our very first issue. He tells Merryn Somerset Webb how he sees the next 20 …
5 Nov 2020
Share tips of the week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
6 Nov 2020
November 2020 update: how the MoneyWeek investment trust portfolio has fared
Investment trust model portfolio

November 2020 update: how the MoneyWeek investment trust portfolio has fared

How have our favourite investment trusts been doing? And what would we change?
6 Nov 2020