The findings, part of the regulator’s ScamSmart campaign, come from a survey which questioned 2,301 UK residents aged 55 and over in February and March.
Low interest rates
It found that current low interest rates have lead 41% of older savers to move money out of savings into investments in a bid to gain a better rate of return.
Nearly a third of those falling victim to investment fraud did so having bought an unregulated product through an unauthorised firm.
Astonishingly, 13% of respondents said they were unaware unregulated products bought through an unauthorised firm are not covered by the Financial Ombudsman Service or Financial Services Compensation Scheme.
The regulator also warned of a sharp rise in cold-calls - the most common tactic used by fraudsters to lure older savers into investing in unregulated products by promising ‘high returns’ .
"If you are contacted out of the blue about an investment opportunity that sounds too good to be true, then it probably is."
Those over the age of 65, and with savings of £10,000 ($14,550, €13,010) or more, are three and a half times as likely to fall victim to investment fraud compared with the wider population, said the FCA.
Meanwhile, the most popular investment choices in unregulated products is land, wine and art – with respondents considering investing an average of £4,000 over the coming year.
About a quarter of those questioned had invested in unregulated products, with 23% admitting they were considering investing in unfamiliar types of investments in the future.
In its business plan published last month, the watchdog revealed that reforms introduced in April last year, giving people unrestricted access to their pension savings, have “created a new market for scammers”.
The FCA has warned investors to be more cautious when they are approached by unauthorised firms selling high-risk investment products.
Director of enforcement Mark Steward said: "If you are contacted out of the blue about an investment opportunity that sounds too good to be true, then it probably is. We would urge you to be sceptical.
"Be suspicious. Ask questions. Do your own checks before investing; check the FCA ScamSmart website, the FCA warning list and the FCA register to see if those who are asking for your money are the real deal.
"If you do experience investment fraud or suspect it, report it - our research found that 60% of those that have experienced investment fraud have not reported it, so the problem could be greater than we know and by reporting it you are helping us to protect others."