Omnium Wealth Management

Blog: How can you avoid pension scammers?

The number of people losing money to so-called pension scammers is on the increase.

For whatever reason, only a fraction of those affected ever come forward to report their experience, so we don’t know the full extent of the financial damage. However, we do know, from the official statistics we have, that 253 people lost a total of £23m to scammers in 2017, or an average of £91,000 per person. For added perspective, a report from the Financial Conduct Authority tells us that 107,000 people aged 55 to 64 could potentially have been victims that year.

In response to this worrying trend, the Financial Conduct Authority (FCA), the financial services regulator, is again running its ScamSmart campaign aimed at alerting people to the growing threat, which often comes via an unsolicited approach by telephone, text, email or social media. You may have already seen this advertised.

The seduction part of the process is based on offering people far higher returns than they are currently receiving on their pension investments. The scammers are skilled, friendly, appear to have all the answers and appeal to that most basic of our instincts – greed! Their own motivation is similar in that, if they are successful as introducers, they are likely to be sitting on some fat commission cheques. Money talks.

The sad thing is that it is not only the elderly or obviously vulnerable who are susceptible to the scammers’ wiles. People who should know better, some of whom are professionally qualified, have proved to be just as receptive to the lure of boosting the value of their nest egg, regardless of risk.

The majority of schemes recommended are based on high-risk, illiquid assets that simply do not deliver or, in worst cases, just go pop. Other schemes involving the transfer of funds into offshore accounts are fraud, plain and simple, with no prospect of the investor ever seeing their money back.

Either way, the risks are very real and no one, rich or poor, seems to be immune. Indeed, based on our own experience, if one of our clients is determined to ignore our advice and place their money at risk, there is very little we can do to stop them. So, what’s the answer?

Well, the good news is that, in January of this year, a complete ban on pension cold-calling was introduced. Firms that break the rules could face penalties of up to half a million pounds. However, there are also lots of things that you can do to avoid being taken in.

With all the advantages of the internet, it is not difficult to check someone out by following these steps:

  1. Only take advice from a financial adviser who is on the FCA’s register of authorised firms. It’s easy to check if someone is authorised – visit the FCA financial services register and enter the firm’s name. The organisation should be clearly marked as ‘Authorised’, which means they are given permission to provide regulated products and services, such as our entry for Omnium Wealth here.
     
  2. In addition, do some research, talk to others (not the bloke you met in the pub), or read reviews, to gain a second opinion from someone qualified to give it, who has used the organisation previously.

Above all, apply some common sense. The old adage that says ‘if something is too good to be true, then it probably is’ has always worked for me. I commend this timeless wisdom to anyone tempted by baseless financial promises. 

Get in touch

If you’re concerned about your pension plan, and want to speak to an independent adviser, please do get in touch and we’ll be happy to talk it through, no obligation. Please call us on: 01483 205890

Interested in finding out more? Read our guide:

    Guide to retirement planning    

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