On 9th January this year the long-anticipated ban on pensions cold-calling came into place. This is a welcome step forward in preventing pension scammers from accessing hard-earned retirement funds and comes three years after a campaign to ban the practice started – led by Darren Cooke.
Last year the FCA published a report analysing pension scams in 2017 – and concluded that victims lost on average £91,000.
The way scammers are targeting pensions, and their subsequent actions, is likely to constitute a criminal offence in any case – so although cold calling is now illegal it is unlikely to eradicate the problem altogether. If you’re willing to scam people out of their retirement savings then a ban on ringing them won’t stop you! The fraudsters will undoubtedly look for ways around the problem or simply ignore the ban completely.
From this perspective we feel that adopting the mind-set that ‘no legitimate adviser would call me out of the blue regarding my pension’ is probably the most advisable. No matter what they say or how well they come across; just hang up!
The FCA believes that only a minority of pension scams are ever reported. If anyone believes they have been targeted in the past, we urge them to come forward and report this. It’s really important and it does help to stamp this out. This can be done in a matter of minutes at Action Fraud
Reporting helps the authorities learn more about the way these scams are deployed and how to fight them.
Whilst this ban may force scammers to become more sophisticated, there are ways of recognising them. Some ‘red flags’ include:
- Unsolicited contact through the post or via email.
- The promise or guarantee of high returns, especially if the risks are downplayed.
- Investments which are unusual or into overseas schemes and are not regulated by the FCA. These often include hotels, green energy schemes, overseas forestry etc.
- Being put under pressure to make a decision quickly, with time limited offers available and a courier being able to come to your house with paperwork to sign.
- Claiming to be able to unlock money from your pension – which under current rules (except in certain circumstances) is not possible until age 55.
- Offering a ‘free pension review’ – the key word being pension. Good financial planners undertake a full review of your complete financial circumstances, not just looking at your pensions on their own.
All of these are warnings but one of the easiest ways to recognise a scam remains the same as it has always been… “If it sounds too good to be true, it probably is”.