All firms carrying on "regulated activities" need to be authorised by the Financial Services Authority. "Regulated activities" include taking deposits and carrying on investment business (such as giving advice). All firms must meet minimum standards of fitness and properness before we will authorise them.

One of the roles of the Enforcement Division is to "police the perimeter" to ensure that only authorised firms are carrying on "regulated activities". Carrying on unauthorised regulated activities is known as breaching the general prohibition (which says that no person can carry on a regulated activity in the UK, or purport to do so, unless he is an authorised or exempt person). This is a criminal offence and it carries a maximum penalty of two years imprisonment and a fine.

We receive tip-offs about potential breaches of the general prohibition from a number of sources. These include victims of illegal investment and deposit schemes, financial journalists, and authorised firms.

Illegal investment and deposit schemes come in all shapes and sizes. For example, someone might offer you an exceptionally high rate of interest for your money, or they might tell you that shares they are promoting are a sure-fire success. They might also tell you that their investment scheme carries absolutely no risks so you cannot lose your money. The bottom line is, if something sounds too good to be true, it probably is!

Sometimes, the unauthorised person will put off telling you the truth about the state of your investment by using your capital or that of new investors to continue to make regular interest payments to you and other investors, eventually leaving you with no capital.

It only takes a phone call to the FSA on 0845 606 1234 (call rates may vary) or a quick search on fsa.gov.uk/register to check that a person is authorised before you part with any money.

Remember, if the firm is unauthorised, you will have no one to complain to when things go wrong, and there will be no compensation scheme to give you back any money you have lost.

The Financial Services and Markets Act ("FSMA") gives us various tools to use against people who are breaching the general prohibition. For example, we can give people a warning asking them to stop or not to start the activities, we can apply to the civil court for injunctions to make people stop or to freeze their assets so that they are protected and available for return to investors, or we can prosecute people through the criminal courts.

More information about illegal investment schemes can be found on our consumer website.