Standing up to the scammers

A new campaign from the FCA and TPR shines a light on the tactics used by pension fraudsters, and aims to educate the public about the risks

The UK Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have launched a joint campaign urging the public to be on their guard when receiving unexpected offers about their pension.

The two regulators unveiled the new ScamSmart advertising drive, targeting pension holders aged 45 to 65 – the group most at risk of pension scams. This comes as a new poll commissioned by the regulators reveals that almost a third (32%) of pension holders aged 45 to 65 would not know how to check whether they are speaking with a legitimate pensions adviser or provider.

According to a report by Action Fraud in 2017, sophisticated scammers are luring people into transferring their pensions into fraudulent schemes, stealing an average of £91,000 per victim. Victims of pension scams can lose their life savings and be left facing retirement with limited income.

Dishonest tactics

The FCA and TPR are calling the public’s attention to the tactics used by pensions scammers. One of the most common tactics is to offer a ‘free pension review’. Research reveals that one in eight 45- to 65-year-olds surveyed (12%) said they would trust an offer of a ‘free pension review’ from someone claiming to be a pension adviser.

It is believed that only a minority of pension scams are ever reported, so the FCA and TPR are urging anyone who believes they may have been targeted to come forward.

Mark Steward, executive director of enforcement and market oversight at the FCA, says: “The size of individual pension pots makes pensions savings an attractive target for fraudsters.

That’s why we’re urging anyone who is thinking about transferring their pension to check who they are dealing with and only use firms authorised by the FCA.

“Pension scams can cause victims significant harm – both financially and mentally. If you are ever in doubt about a pension offer, visit the ScamSmart website.”

Nicola Parish, executive director at TPR, adds: “£91,000 is a huge amount of money for someone approaching their retirement to suddenly have ripped from their savings.

“If someone cold-calls you about your pension, it’s probably an attempt to steal your savings. Our message is clear – hang up and report it.”

Mark Hutchinson, societies and member marketing director at the PFS, added: “Personal finance professionals are uniquely qualified and experienced to be able to spot potential scams and we continue to encourage all PF members to commit just a small amount of time each month to help identify and report potential scams.

“We are also asking our members to help raise awareness of scams amongst their clients, professional network and other connections.

“As a profession we have the opportunity to make a huge impact in helping close down investment scams before they do too much damage.”

Don’t become a victim

The joint advertising campaign shows the contrast between the impact on the victims of pension scams and the lifestyles enjoyed at their expense by the criminals. Using TV, radio and social media adverts, it urges anyone who is contacted about their pension to visit ScamSmart before they transfer any funds, so that they do not end up becoming the victim of a scammer.  

Those aged 50 or over who require free, independent advice can contact the UK government-backed Pension Wise service at: pensionwise.gov.uk/en

If your clients think they have been a victim of a pension scam, please visit fca.org.uk/scamsmart to find out more. 

Scam tactics to warn your clients about

Cold-calling is currently by far the most common method used to initiate pension fraud. Other scam tactics include:  

• Unexpected contact about a pension via phone, post or email
• Promises of guaranteed high returns and downplaying the risks
• Offering unusual or overseas investments that are not regulated by the FCA, such as overseas hotels, forestry and green energy schemes
• Putting people under pressure to make a quick decision, for example with time-limited offers and sending a courier round with paperwork to sign
• Claiming to be able to unlock money from an individual’s pension (which is normally only possible from age 55).

Help your clients become Scamsmart

The FCA and TPR recommend four simple steps for advisers to give clients to protect them from pension scams:

• Reject unexpected pension offers – whether made online, on social media or over the phone
• Check who you are dealing with before changing your pension arrangements –check the FCA Register online or call the FCA contact centre on 0800 111 6768 to see if the firm you are dealing with is authorised by the FCA
• Don’t be rushed or pressured into making any decision about your pension
• Consider getting impartial information and advice

Check out the PFS’ 15 minute commitment to unearthing scams campaign at: www.thepfs.org/about/inside-the-pfs/scamsmart/

Picture Credit | IKON