The joint unit of the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and the Autorité des Marchés Financiers (AMF) carries out monitoring and prevention work to alert savers to financial scams, the number of which has increased since the start of the health crisis. In addition, certain legal but deceptive practices require vigilance. What are the pitfalls to avoid, and what precautions should you take?
Number of fraudulent sites on the rise
The Covid-19 pandemic has led to the digitalization of many services, resulting in a significant increase in the number of fraudulent sites.
The Assurance Banque Epargne Info Service (ABEIS) website, deployed by APCR, informs consumers of their rights and keeps them informed of various financial scams. Several blacklists are available online, listing fraudulent companies and sites in the investment, credit, cryptoasset derivatives and binary options sectors.
In 2020, 1,200 names were added to these lists, bringing the total number of fraudulent companies and sites listed to 2,400, twice as many as in 2019. In its 2020 report, the Pôle commun de l'ACPR et de l'AMF also identified 560 cases of usurpation of the names of products, authorities or players.
Life insurance: strong incentives to buy unit-linked products
In today's persistently low interest-rate environment, many insurers are encouraging their customers to diversify into unit-linked products. Admittedly, the returns may be more attractive, but the risks of these investments are also greater and borne solely by savers, unlike capital-guaranteed funds.
In its annual report, the Pôle commun de l'ACPR and the AMF noted that, by 2020, 90% of financial incentive offers were subject to a condition of investment in units of account. Insurers are also increasingly and massively offering reduced fees, or even temporarily waiving them, to encourage customers to make these payments.
The supervisory authorities are therefore calling for vigilance, and are working to ensure that customers are informed of the potential risks associated with these investments.
The sustainable finance argument increasingly in use
The ACPR and AMF have noted a certain development of greenwashing in bank and insurance advertising, especially during the 2nd half of 2020.
The French are increasingly sensitive to environmental arguments, and this interest in sustainable finance is sometimes used by advertisers without the practices of the establishments in question being aligned with the message conveyed.
The supervisory authorities are currently conducting a major monitoring program to combat misleading advertising in the field of sustainable finance.
Customers with little or no information
The joint unit of the ACPR and AMF closely monitors the quality and accuracy of the information provided by financial institutions to their customers.
The report highlights a number of shortcomings, and mentions the customer knowledge questionnaires which, in two audits carried out at retail banks, "were not sufficiently developed to gather the information needed to properly assess the suitability of the recommendation for the customer's situation".
In addition, several inspections revealed that some financial investment advisors (CIF) were recommending to their customers "atypical products that are not regulated or authorized for marketing in France". Customers were not sufficiently informed of the risks, nor of "the remuneration received by FIAs from promoters, even though the latter are at high levels likely to place FIAs in a conflict of interest situation".
The supervisory authorities are also calling for vigilance with regard to participatory financing, as project promoters do not always inform potential investors of quarterly default rates, even though they are obliged to do so.