Written by Tom Selby, head of retirement policy at AJ Bell
The cost-of-living crisis has dramatically increased the financial vulnerability of millions of Brits, with over 30 million people struggling to keep up with their bills, an increase of around 6 million compared to 2020*.
There has also been a significant rise in the number of people in financial difficulty, with 4.2 million people missing domestic bills, up from 3.8 million in 2020.
Such an environment is a scammer’s paradise, so you need to be on your guard when financial offers, particularly those which seem too good to be true, come out of nowhere from someone who is not regulated.
It is positive that the regulator is clamping down on dodgy adverts, but the scale of the financial universe and the fact many of the most dangerous firms are not regulated means individuals need to arm themselves to avoid becoming a victim of financial fraud.
The Online Harms Bill has the potential to provide a vital extra layer of protection for savers by making internet giants responsible for the paid-for advertising they host – including those promoting dodgy scams.
With the Bank of England issuing a dire economic warning yesterday, it is more important than ever that the Government does all it can to protect people from scams.”
Here are some steps you can take to help avoid being scammed:
- If someone contacts you out of the blue, hang up!
Most people at some point will have received a phone call from someone they don’t know claiming to offer an incredible investment opportunity for their savings or a ‘pension review’ service. If this happens, hang up immediately. Equally, don’t respond to text messages, emails or social media contact from someone you don’t know claiming to hold the key to retirement nirvana. In all likelihood this will be a scammer phishing for victims, so, whatever you do, don’t take the bait.
- Don’t deal with unregulated ‘advisers’
While telephone, text, email and social media remain the primary weapons of choice for the modern con artist, some continue to knock on doors; usually targeting older people they think are more likely to be vulnerable. Make sure you only deal with FCA-regulated advisers – this is particularly important as if you are sold an investment by an unregulated individual, you won’t have recourse to compensation.
- Be wary of overseas or crypto investments promising sky-high returns
Scammers often promise double-digit returns through exotic investments in far-flung locations. Promoting cryptocurrency investment ‘opportunities’ has also become an increasingly popular route for fraudsters. If you’re told you can get 10%+ annual returns from a teak plantation in South American or a hotel room in Spain, tread carefully and do your due diligence. Often fraudsters will advertise investments in an asset that doesn’t exist or hasn’t yet been built, so don’t hand over your cash unless you’re 100% confident you’re being sold a genuine, bona fide investment.
- Watch out for schemes offering ‘guaranteed’ returns
Nothing is guaranteed when it comes to investments. If a company you’ve never heard of says it can deliver GUARANTEED returns of any amount, don’t touch them with a barge pole.
- Don’t rush to make a decision
Don’t be forced into doing something you aren’t comfortable with and might regret by a pushy salesman or saleswoman desperate to boost their commission. Your pension might just be the most valuable asset you ever own, so invest it wisely. And if you are at all unsure, check the FCA’s ScamSmart website (ScamSmart – Avoid investment and pension scams | FCA) or speak to a regulated financial adviser before making any decision.