How much investment fraud is there each year in Britain? It isn’t a simple question. Trying to come up with a number can seem a bit like attempting to gauge the size of an iceberg from the small part that pokes up above the waves.

Sound tricky? Well that probably understates it. Icebergs do at least obey nature’s laws, with roughly nine-tenths routinely lying beneath the surface.

With investment scams there’s no fixed relationship. The submerged part can be enormous. Let’s take, for example, frauds involving pension schemes. While police figures for reported scams in 2018 amounted to 180 cases worth just £15m, industry guesstimates of their true value in a single year run at £4bn — 267 times as much — according to a report from the Police Foundation, a think-tank.

The gap reflects the fact that many people may not yet know they have been swindled or are too ashamed to report it.

What most can agree is that the number of investment scams is rising. Data from the Financial Services Compensation Scheme, an industry lifeboat that insures savers against losses, show payouts going up steadily — from £243m in 2013/14 to £527m last year. Granted the FSCS is not a perfect proxy: it includes non-scam losses. But this year, the payouts are expected to rise further to £650m. And that’s before further expected rises as some big claims kick in, such as for London Capital & Finance (LCF) — a notorious scheme which failed in 2019 after selling £237m of “mini-bonds”.

Several factors are fuelling the upsurge. First there’s the backdrop: the low interest rate environment which encourages people to seek higher returns elsewhere. Then there is the unsatisfactory state of oversight and enforcement. The UK’s National Crime Agency believes that fewer than a fifth of economic crimes even get reported to police, while the high cost of investigation means few of these get looked into. Only one in 500 ends up in court annually.

A recent report by the barrister Dame Elizabeth Gloster into the LCF scandal shows how easy it is to run rings around the UK investment watchdog, the Financial Conduct Authority. Despite authorising the firm, the FCA failed to act on warnings about LCF’s unregulated (and disreputable) bond issuing activities because those products fell outside its “regulatory perimeter”. Savers were encouraged to invest, believing an authorised firm must be safe.

As for the watchdog’s own record of throwing the legal book at offenders, a recent Freedom of Information request summarises its lacklustre record. In 2018, the FCA disclosed it received almost 7,000 fraud complaints. Yet it opened just 40 investigations in the last two years and none resulted in a prosecution, let alone a conviction.

The authorities may be static but the frauds are constantly evolving with chameleon-like adeptness. The latest worry concerns “clones” — fraudsters that pop up on line using the identities of well-known financial brands.

Yet there is almost nothing to stop unregulated entities popping up on the internet offering some scam product, collecting the cash and then upping sticks and walking away.

Britain needs to take investment scams more seriously. According to a Police Foundation report, fraud and computer offences now make up 44 per cent of all crime in England and Wales, eclipsing traditional crimes such as burglary and car theft.

These online crimes are not only devastating for victims, they are also bad news for other savers. Compensation is financed by levies on financial firms, which will next year rise to more than £1bn, their highest level since the financial crisis.

It goes without saying police and prosecutors need to do more. But the authorities need to look harder at choking off the route fraudsters have to reach the customer. Under planned government legislation, search engines and websites are to be made accountable for harmful content on their platforms, such as terrorist propaganda and anti-Semitism. This should be extended to financial scam adverts.

Increasingly, online investment fraud looks like a new breed of crime that has somehow turned punishment into a remote occupational hazard. Its growth will continue until the balance of risk and reward are reset.