How to avoid a dishonest client

By Ryan Smith on May 8, 2018

An unscrupulous client can cost you and your firm.

If you’ve just welcomed a new client to your business who asks “Are financial advisers worth the money?” or seeks guidance on the pension advice allowance, then naturally, you will aim to deliver a great service.

To do this, you should begin with a little caution. Not everyone is who they say they are, and appearances can be deceptive.

The sad fact is that fraudsters are becoming worryingly more sophisticated on a day-by-day basis, with identity fraud being their favourite modus operandi.

Their goal is to con you into transferring large sums of money into phoney accounts. If this happens, then your business takes a financial hit, or worst of all, it suffers potentially ruinous reputational damage.

You can take steps to avoid disaster, however. Here’s how:

  • Obtain proof of a new customer’s name and address before you act on their behalf. You will need two government-issued documents, such as a valid photocard driving licence or valid passport, that bear the customer’s full name, date of birth, full residential address and photo.
  • Ensure that you have these documents certified by a relevant authority. Examples include UK lawyers, accountants, family doctors, qualified teachers, stockbrokers, British Embassy Consular Officials, members of the judiciary, public notaries, commissioners for oaths, police officers, senior civil servants and managers or directors of a regulated financial institution.
  • Be diligent by sourcing funds. Verify that an investment is coming from a client’s personal account or a verified third party such as a relative or friend.
  • Keep in regular contact with your clients. A personal relationship is exceedingly difficult for crooks to imitate. If you know your client, then you’ll know when something looks and sounds suspicious.
  • Stay ever vigilant about unusual activity. It might be innocent and legitimate, but it might not. To be sure, it’s essential to verbally contact your client for personal confirmation of a request before you accede to it.
  • If you feel suspicious that a request seems out of character, then trust your instincts, pick up the phone and give your client a call.
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