- Security TWENTY
- Women in Security
Being offered a free pension review out of the blue. Being offered guaranteed higher returns – claiming they can get you better returns on your pension savings. Offers to help to release cash from your pension, even though you’re under 55. High-pressure sales tactics – scammers may try to pressure you with ‘time-limited offers,’ or even send a courier to your door to wait while you sign documents. And unusual investments which tend to be unregulated and high risk. These are five common warning signs of a pension scam, according to the UK regulator the Financial Conduct Authority (FCA).
Its research showed pension holders were nine times more likely to accept advice from someone online than they would from a stranger met in person. They are five times as likely to be interested in a free pension review from a stranger online than someone in their local pub. The way people make decisions is naturally affected by their environment and scammers take advantage of this, says the FCA.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said: ‘Imagine a stranger in a pub offering free pension advice and then telling you to put those savings into something they were selling. It is difficult imagining anyone saying yes to that.
‘It’s no different online. Whether you’re on social media or checking your emails, if someone offers you free pension advice, ‘flip the context’ and imagine them doing the same thing in real life. Stop and think how you would react. Fraudsters will seek out every opportunity to exploit innocent people, no matter how much they have saved.
‘Check the status of a firm before making a financial decision about your pension by visiting the FCA register. Make sure you only get advice from a firm authorised by the FCA to provide advice, before making any changes to your pension arrangements.’
And the psychologist Dr Linda Papadopoulos, who is supporting the ScamSmart campaign said: ‘Scammers will use behavioural tactics to trick you into a false sense of security. Often these criminals will manipulate and persuade you to do things in the moment, which ordinarily you would feel suspicious of in a more familiar setting, such as a shop or local pub.
‘It is important when approached with a financial offer on your pension, to take yourself out of the context or pressure of that moment. We know that people wouldn’t accept a free financial product in a pub or would be unlikely to make a purchase in a random flash sale – so why risk it with your pension?’
The FCA’s ScamSmart website gives consumers tips on how to spot the techniques used by fraudsters and hosts the FCA Warning List.
Meanwhile the Work and Pensions Committee of MPs has complained of Government inaction after the Committee’s report on pension scams. Stephen Timms, Chair of the Committee, said: “Ministers claim to understand the devastating impact of illegal activity online, but by constantly failing to act against paid for adverts online they remain at odds with their own enforcement agency and totally ambivalent to what the FCA warns is a major source of harm.
“The FCA sees the damage being done to consumers by online scams day in day out. It doesn’t think it has enough powers to protect people, yet still the Government cannot be cajoled into action. A vague promise to consult later this year is too little too late. Without backing words with action, the law will remain toothless and continue to allow scammers to advertise with impunity while tech giants line their pockets from the proceeds of crime.”