New research published as part of the Scam Smart Campaign organised by the Financial Conduct Authority and The Pension Regulator has revealed that 42% of people said they might fall victim of a pension scam. That’s potentially over 5 million people.
In 2018 over £27million was lost to pension scams and the average lost was £82,000 per victim.
The Top 5 Scams to watch out for are:
- Exotic and unusual investments offering high returns. These include renewable energy bonds, forestry schemes, storage units, car parking spaces, biofuels and overseas properties.
- Cold calls over the telephone leading to an appointment with a pension “expert”. Cold calling has been banned for financial services.
- Offers of early access to your pension pot (before the age of 55). This is not possible.
- Guaranteed high returns. Remember if it looks too good to be true it usually is.
- Time limited offers – transfer your pension within the next two weeks to guarantee a high return.
Please be vigilant at all times. Always check who you are dealing with by searching the FCA Register to confirm that you are speaking to an authorised firm.
Looking at who is most likely to affected by financial scams, The Spectator (5/10/19) reported research by the Financial Conduct Authority which showed that the victims of scams tended to be “wealthy, financially sophisticated males, with an escalating correlation to older age”, which you might find surprising? In terms of age, as you might expect the over 75’s was the most vulnerable, but vulnerability begins to increase from 55 onwards. More surprisingly, those with incomes of £100,000 or more are the most vulnerable group, being 80% more likely to be scammed than the general population.
It seems that more financially sophisticated you are, the more likely you are to be scammed, probably because the financially sophisticated are more likely to make varied investment decisions which opens up the opportunity to be scammed.
The chances of falling victim to a scam are about 50/50 according to the report Fraud the Facts 2019, which estimates that £1.2 billion was stolen through fraud and scamming, whilst £1.6 billion of scams were prevented from taking place, although its unclear how accurate this estimated data is.
Update 16/12/19. The FCA has just released its latest “scam warning” figures, for 2018-2019 and its not good news. The number of “scam warnings” increased by almost 70%, up by 224 warnings to 552. These are “scam warnings” issued by the FCA unauthorised firms operating in financial services. Many try to disguise themselves as household names with fake domain names trying to look like bona fide websites – so be careful.
According to the FCA over 500,000 people used their Scam Smart website to check whether firms were authorised, which is always the best place to start your checks. You can also check the FCA register, but be careful to check the spelling of company details and their address details to avoid the fake firms.