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How to avoid unauthorised online banking firms

The UK's Financial Services Authority provides a long list of every unauthorised online banking firm that has been reported to its website. Since none of them are registered with the authority, little is known of their activity.

Bank customers who become involved with such companies should note that they will not be eligible to any compensation schemes if they lose money or receive a poor level of service. People should be extra careful when making any formal commitments to a company providing financial services that is not registered with the FSA.

The FSA also advised customers to be aware of foreign companies that fail to abide to the UK's Financial Services and Markets Act of 2000. Many of these companies offer shares that customers are unlikely to benefit from; some will even offer shares that are completely worthless.

People who are contacted by representatives of companies that are advertising their shares or stocks on the phone should abandon the call as soon as they become suspicious. This is the best protection for customers because it is impossible for these firms to continue operating without customers.

The FSA recommends that people should take caution with online companies even if they are not included on the list of unauthorised firms. This is because the list is constantly updated every week. For example, in the first week of September 2011 there were 11 companies added to the list of unauthorised foreign firms on the website of the FSA. These include Sinclair Insurance, Innis Financial Services and Hong Kong Finance among others.

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