It is likely that we have all been a target of some form of scam so far this year. These are designed to get us to part with our savings, reveal our personal information or click on bogus or harmful links or attachments. In many cases we may not have realised we have been targeted.
Linked to this, I recently read with alarm an article that almost 8 million people in Britain have been targeted by fraudsters attempting to trick innocent pension savers out of their life savings. The number of pension and non pension scams has rocketed during the pandemic and the article went onto say that pension scams have become one of the most common types of fraud (up 45% so far this year compared to 2020).
The Pensions Regulator is currently investigating more than £54 million of lost pension savings, affecting 18,000 people, although the figure is likely to be much higher. A survey conducted by LV, the insurance and pensions provider found that 14% of adults (7.6 million people) had received unsolicited emails, texts or calls from people encouraging them to transfer or release money from their pension.
Cold calling has been the most common way for scammers to target their victims, although alarmingly, scammers are also using fake websites. Aviva, the pension group, identified 27 fake websites (between March and September 2020) that purported to be the company and were trying to defraud pension savers. Scammers are using sophisticated language and marketing techniques to appear genuine and authoritative.
This has become a huge issue which needs to be given more attention. At the moment there is little regulation to tackle financial harm or fraud. Sadly, people are losing their life savings to fraudsters by being tricked into moving their investments and pensions into risky schemes, many of which are overseas, and which often collapse. In these cases, they are unlikely to get anything back because these schemes are not regulated by the Financial Conduct Authority (FCA) and without regulation there is no protection if anything were to go wrong.
But this problem is not just confined to pension or investment fraud.
There are many different types of financial fraud which use techniques to share data and target specific groups. They are becoming ever more sophisticated. For example, elderly people living on their own with a cognitive impairment such as dementia who are less likely to be able to safeguard themselves are at a high risk of being targeted. Furthermore, under 25’s are most likely to be the victim of a banking scam. So both old and young are at risk, as well as those in between.
The impact financial scamming can have is not just a financial one but can be a severely detrimental life changing event for the individual undermining health and quality of life. It can also (and often does) impact the family too.
Here are some tips to avoid scammers:
Reject cold calls and approaches from out of the blue.
Take your time and don’t be rushed into making a quick financial decision.
Beware of websites offering to unlock your pension before age 55 or offering high returns. If it looks too good to be true it usually is. Also, early access to pensions can cause a ‘double loss’ as this would constitute an unauthorised payment with a tax charge of 55% even if the individual never received the liberated funds.
Always find out who you are dealing with by checking out the FCAs online register of authorised firms and individuals.
Check the FCAs warning list for known investment scams. These are firms that the FCA know are operating without permission or running scams.
You can get free and impartial advice from the Pension Advisory Service or advice from an FCA regulated adviser before making any decisions.
Tackling the problem
Initiatives are being taken by various bodies to tackle these issues and it is only by taking a collective effort that awareness can be raised. One of these is called “Friends Against Scams” which is an initiative which aims to protect and prevent people from becoming victims of scams.
They have produced a really helpful website where you can learn about the different types of scams and increase your knowledge and awareness. They have also produced a short educational online learning session which can be found at www.friendsagainstscams.org.uk/training/friends-elearning.
This issue is not going to go away and is likely to get worse so firstly it is important to protect yourselves from scams but also raise awareness within your families, young and old (as they may be more vulnerable to scams), as well as amongst your friends.