With confusion around Brexit giving fraudsters more opportunities to scam customers, knowing what to look out for can help you to protect your pension pot
The issue of pension scams has received widespread attention but, despite this, millions are still being lost to fraudsters.
The issue was compounded by the introduction of the Pension Freedoms in 2015, which enable people to take their pension pots as a lump sum – a tempting prospect for fraudsters. And, more recently, with all the uncertainty surrounding Brexit and how it might impact people’s finances, fraudsters have jumped at the chance to trick more customers into investing in pension scams.
You can find out what Brexit means for Royal London members on our website.
While the number of scams is growing, the likelihood is that their true scale is grossly underreported. Many people feel too ashamed to admit that they’ve been taken in by a scammer. This can cause a lot of anxiety, and it’s important these people know they’re not alone so they can report what’s happened and access the support they need.
What’s a pension scam?
Pension scams usually start with a call, text or letter offering either a free review of your pension arrangements or introducing some kind of high returning or even guaranteed investment.
The investments offered are usually based overseas and a quick decision needs to be made if the investment is to be taken advantage of.
Things to remember
All financial advisers should be registered with the Financial Conduct Authority (FCA). They’ll meet the right standards and you’ll have more protection if you’re not happy with their services.
A regulated impartial financial adviser or a guidance service such as the Pensions Advisory Service would never contact someone directly, particularly if you have never dealt with them before.
A regulated impartial financial adviser would also never pressure a client into making a quick decision. They would prefer you to think about it before coming to a final decision.
What’s being done to stop pension scams?
The government has been looking at how it can tackle scams for some time.
- In January 2019, cold calls related to pensions were banned. Companies that break the rules could now face fines of up to £500,000.
- Rules are being tightened to stop fraudsters from opening pension schemes – but there’s no timetable for implementation as yet.
- There are several initiatives, such as the FCA's ScamSmart campaign, aimed at raising awareness of scams.
What can you do to protect yourself?
There are several things you can do to help protect yourself and your finances from scammers.
- Treat unexpected calls, emails and texts with caution. Don't assumer they're genuine, even if the person knows your basic information.
- Never give out your personal or financial details unless it's for a service you want to use, and where you trust the provider.
- Remember that real organisations will never ask for your full password or PIN, or to move your money to another account.
- Don't be pressured into acting quickly. A genuine bank or financial services firm won't mind waiting if you want time to think.
- Always double-check the URL and contact details of a firm in case it's a 'clone firm' pretending to be a real firm, such as your bank.
- Check email addresses - if it's a scam, it may be filled with numbers, or be misspelled. But remember that fraudsters can 'clone' email addresses to make emails seem genuine.
- Look at the FCA's unauthorised firms and individuals complaints list.
- If you're buying a financial product, only deal with an FCA-authorised firm - you can check the register on the FCA website.
Remember the old adage: if it seems too good to be true... it probably is!
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