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

Why you should still put money into a cash Isa
Cash ISAs

Why you should still put money into a cash Isa

Interest rates may be lousy, but tax-free saving into a cash Isa is still a good idea.
23 Feb 2021
Are you prepared to have your savings put into compulsory “recovery bonds”?
UK Economy

Are you prepared to have your savings put into compulsory “recovery bonds”?

The pandemic has put a huge hole in public finances – while bolstering many of the country's savings. Could one be used to bail out the other? Merryn …
11 Feb 2021
Sipps versus Isas: which one suits long-term savers best?
Sponsored

Sipps versus Isas: which one suits long-term savers best?

Both Sipps and Isas are tax-efficient long-term savings vehicles. David Prosser explains the advantages of using one over the other.
7 Dec 2020
This year’s endless fiasco at NS&I
Personal finance

This year’s endless fiasco at NS&I

National Savings & Investments (NS&I), has lurched from one disaster to another this year. Ruth Jackson-Kirby looks at what's gone wrong.
6 Dec 2020

Most Popular

The days when you could get 7% from your bank are long gone – so what do you do?
Bitcoin

The days when you could get 7% from your bank are long gone – so what do you do?

With interest rates at rock bottom for so long, we’ve been forced to move from saving to speculating to earn any sort of return. Dominic Frisby asks w…
24 Feb 2021
Why you should still put money into a cash Isa
Cash ISAs

Why you should still put money into a cash Isa

Interest rates may be lousy, but tax-free saving into a cash Isa is still a good idea.
23 Feb 2021
Are we heading for another bond market tantrum?
Government bonds

Are we heading for another bond market tantrum?

The last time the US central bank tried tightening the purse strings, the bond markets threw a tantrum. With yields now rising, could we be about to s…
25 Feb 2021