Article by Phil
Money advisors have warned that whilst the common picture is one of older people being the most vulnerable to financial scams, the reality is quite different. It’s the younger generation who transact most online who are the most vulnerable.
The latest research from FT Adviser (17/1/24) found that:
- 50% of 25 to 35 years olds had been victim of a financial scam or fraud, or at least knew someone who had been a victim.
- This fell to 33% of 45- to 54-year-olds and only 21% of over 55’s. So less than half of the number of under 35’s.
- 63% of people did report getting their money back. But that means that 37% didn’t.
- The average loss is £537.
- Over half of 18- to 24-year-olds reported not feeling confident about handling their money. That probably doesn’t help.
- 75% said that they wish there had been more financial education in school.
Banks, money advisors and other financial institutions are trying to remedy the situation with new security measures. Some of these include:
- Spending alerts every time a transaction is made.
- The ability to remotely freeze card payments if you are suspicious about a transaction.
- Location tracking to identify whether a transaction has been made at the same location as your phone.
- Tracking your personal behaviours. This involves AI looking at how you type, spell, what devices you use etc to determine whether it’s likely to be you who is making the transaction. Very advanced.
Not everyone is happy about this level of control. In fact, less than 50% support all these controls.
Sometimes losses from scams can run into millions. The police are currently warning people, especially the over 70’s, to be aware on “courier fraud”. This is where people are contacted by criminals posing as the police. They are being told that their bank accounts have been taken over by fraudsters and then coerced into purchasing gold in order to help the police operation. It sounds bizarre. But so far one elderly person has lost over £5 million to this type of fraud and another £1.9 million. So, the sums involved can be significant.
If you know anyone who has been contacted by the “police” and asked to help an investigation by providing them with access to their bank accounts, please report it.
It’s not just scams that you need to be wary of. It’s you own decision making!
A retiree is claiming that DIY investment platforms should do more to protect clients from losses. He drew down his £220,000 pension 7 years ago at the age of 55, but now it’s only worth £3,000. That’s as a result of a series of failed high risk investments and too many withdrawals. There were no money advisors involved. All the decisions were made by the customer through his online Hargreaves Lansdown platform. But he claimed that he had a gambling addiction which should have been taken into account when opening his online account.
The case was referred to the Financial Ombudsman Service, but they decided that the client was at fault not Hargreaves Lansdown. Although it did flag concerns about understanding the needs of vulnerable customers.
In other news, Amazon has announced the closure its Amazon Insurance Store business after less than two years of operation. The business offered home contents policies, acting as a broker. Many thought that Amazon could change the face of insurance, but that hasn’t happened. It was a similar story when Google tried to enter the market way back in 2012 with its Google Comparison business. That to closed down in less than two years.
This has happened to other brands trying to enter the market. The likes of Sainsburys and Tesco’s both had to scale back their insurance and mortgage offers, when they weren’t taken as successful as they’d hoped.
