Beware of cash Isa scams

published 19 November 2019

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.

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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, Comparethemarket, Moneysupermarket 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.

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.