Pension regulators join forces to launch scam campaign; average victim lost £91k in 2017

Written by Natalie Tuck
15/08/2018

The Pensions Regulator and the Financial Conduct Authority have joined forces to launch a campaign urging people to be aware of scammers targeting their pension savings, as it was revealed an average £91,000 was lost per victim in 2017.

The ScamSmart advertising campaign targets savers aged between 45 and 65, which the regulators say is the most at risk group. Almost a third (32 per cent) of pension savers in the age group would not know how to check whether they are speaking with a legitimate pensions adviser or provider.

The FCA and TPR are part of Project Bloom a multi-agency taskforce which is working to combat pension scams. The taskforce includes the DWP, HM Treasury, the Serious Fraud Office, City of London Police, the National Fraud Intelligence Bureau, The Pensions Advisory Service, and the National Crime Agency.

The latest campaign has been backed by the Pensions Minister Guy Opperman, who urged savers to “always exercise caution” and seek independent guidance before making important financial decisions.

“Pension scams are devastating for hardworking people and can rob them of the retirement they planned…Anyone looking for free, impartial guidance on pensions can visit Pension Wise or The Pensions Advisory Service,” he said.

The regulators have warned that scammers are highly sophisticated, with one of the most common tactics being the offer of a free pension review. Research revealed that one in eight 45 to 65-year-olds surveyed (12 per cent) said they would trust an offer of a ‘free pension review’ from someone claiming to be a pension advisor.

TPR executive director of frontline regulation Nicola Parish said: “£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.”

In addition to cold calling, which the regulators said is the most common method used to initiate pension fraud, the regulators also warned of contact via post or email. A cold calling ban was due to be implemented by the government by the end of June this year, but the deadline was not met. It has since launched another consultation on the ban.

The FCA and TPR urged people to watch out for offers of guaranteed high returns and downplaying the risks and offering unusual or overseas investments that aren’t regulated by the FCA e.g. overseas hotels, forestry, green energy schemes.

Scammers will also put people under pressure to make a quick decision, for example with time-limited offers, and sending a courier round with paperwork to sign. They will also claim to be able to unlock money from an individual’s pension (which is normally only possible from age 55).

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

FCA executive director of enforcement and market oversight Mark Steward said: “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.”

The campaign has been welcomed by the Pensions and Lifetime Savings Association, policy lead (engagement, EU and regulation), James Walsh: “With people losing tens of thousands of pounds to pension scams on average, it’s vital we keep up the battle against scammers and raising public awareness is a key part in this fight.

“Together with the forthcoming cold-calling ban and the revised code of practice from the Pension Scams Industry Group (PSIG), this campaign is a crucial step towards protecting savers from being hoodwinked into high-risk or fraudulent investments.

“However, none of these initiatives is a silver bullet. Scammers are very quick to adapt their methods, so we must remain vigilant if we are to help keep savers safe. We continue to call on the government to introduce an authorisation regime for pension schemes. This would give people confidence that their pension scheme is a legitimate home for their retirement savings.”

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