An article by Money Week reveals that 28% of pension savers are worried about falling victim to fraud. Sadly, the fear may not be misplaced, as the article also reports that pension scams are on the rise according to research by Scottish Widows.
The revelation dovetails into a warning given by the City of London police, which also issued a warning about “get-rich-quick” investments after a significant increase in scams. It revealed that in 2021, more than £890 million was lost to investment fraud – up 49.5% on 2020’s figure of £596 million.
There is good news though: there are warning signs that could help you identify fraudsters if they make contact. Before we look at five of them, let’s first look at how scammers may try to contact you.
Pension liberation schemes
As pension pots can be worth a lot of money, criminals are keen to access them. A common way they do this is to offer “pension liberation” or “pension loan” schemes, which fraudsters claim allow you to access your pension before the age of 55.
Always treat this offer with suspicion as typically you can only access your pension on very rare occasions, such as if you have a life-limiting illness. If you go ahead you could face substantial costs, a significant tax bill, or both.
Fake adverts
According to Which?, search engines are used by criminals who rely on paid-for adverts to snare victims. If you see an advert on a search engine, carry out diligent checks on any company or product you’re interested in, and that includes on a comparison site.
Be wary of adverts that offer slightly higher returns than the standard rates, as they might be fraudsters trying to make their scams look attractive without setting alarm bells off.
Bogus investment companies
Criminals set up faux companies that imitate genuine investment firms. Once they have your money, they will either put it into a high-risk investment with exceptionally high charges, or simply keep your money.
Scammers also produce professional looking information that’s extremely similar to the legitimate company they’re cloning. This includes address, contact details and FCA number.
Always check with the Financial Conduct Authority’s (FCA) warning list, as it provides a list of companies that are not operating appropriately. Doing this could confirm whether the company you are talking to is bona fide or not.
Even if it doesn’t appear on the warning list, it’s worth checking against the FCA Financial Services Register to ensure that the company is licenced to deal with the product you’re being offered.
Via social media
Scams are prevalent across social media as it encourages the sharing of information that may expose you to criminals who encourage you to share personal information. Fraudsters could then use this information to try to steal from you.
Be wary of “free gift cards” or ” discount coupons” in exchange for completing a survey, as this could be a scam, especially if it only appears on social media. Likewise, if someone makes contact via social media out of the blue, be very careful and carry out diligent research before replying to an invitation or offer.
There are tell-tale signs of a scam that you can look for
Even though criminals are increasingly sophisticated, and convincing, they often use the same “tricks” to convince victims to part with their money. Read on to discover five tell-tale signs that you may be talking to a scammer, which could help you protect your wealth.
1. Unexpected contact
Scammers could make contact without any warning via phone or email. That said, they are not the only ways a scammer could get in touch, as they may approach you in the high street or by knocking at your door.
If you are contacted in any of these ways always be extremely careful and do not share any personal information. Furthermore, if they claim to be from an official organisation, stop the conversation and contact the organisation directly using contact details you know to be authentic.
Please note that since 2019 financial advisers are not allowed to make cold-calls about pensions. If you’re contacted out of the blue about yours, end the call.
2. Being overly persistent
If the person you are speaking to does not want you to take time to think about the product they’re offering, they’re probably a fraudster. Scammers typically demand an immediate decision, and may become overly persistent if you do not make one.
3. Not providing contact details
Usually, criminals will not want you to call them back. Instead, they are likely to insist that they will call you back after a short period of time. If you are provided with a website address, carry out diligent research to make sure it’s legitimate.
4. Being vague
Fraudsters are often vague and instead of providing details about their product, will instead keep referring to the (unrealistically) high returns you’ll make.
Always remember, greater growth potential always comes from greater risk, so be extremely sceptical if you’re told you will receive high returns for low-risk.
5. Using time constraints
Scammers use a limited time frame to pressure victims into making a decision. It provides a sense of urgency, which scammers know increases the chances of someone going ahead.
If you are told the offer is for a limited period, be wary.
Get in touch
No matter how convinced you are that an offer is legitimate, it never hurts to check with a financial planner before making a decision. A genuine financial planner who is authorised and regulated by the FCA is the best way to protect your money from scammers.
If you would like to talk about investing your money, your pension strategy or wider wealth with a financial planner you can trust, please contact us on admin@stonegatewealth.co.uk or call 01785 876222.
If you believe you have been scammed, you can report it on the Action Fraud website.
Please Note
This article is for information only. Do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, and levels, bases and reliefs from taxation may be subject to change.
Investments carry risk. The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.
Production
