FCA warns over Derren Brown-style ‘misdirection’ scams risk as a quarter of savers eye early pension access during cost-of-living crisis – AJ Bell

by | Oct 6, 2022

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Written by Tom Selby, head of retirement policy at AJ Bell

As inflation tightens its grip on Brits’ finances and millions of households face up to the prospect of spiralling mortgage bills as interest rates rocket, it is inevitable scammers will increase their activity as they look to prey on rising vulnerability.

Recently published data shows the number of savers accessing their retirement pots for the first time surged in 2021/22, a trend undoubtedly linked to the rising cost of living.

This combination of vulnerability and rising numbers of people accessing their retirement pots is like blood in the water to fraudsters, who will often employ Derren Brown-style con tricks and misdirection to exploit people’s lack of confidence and understanding of pensions.”


 Anatomy of a confidence trick

The more people are aware of the kind of tricks financial scammers use, the less likely they will be to fall for these sorts of tactics.

The con often begins with a distraction, such as offering a ‘free pension review’. Worryingly, almost half (44%) of over 40s with a pension would take up this offer, opening the door for fraudsters to build trust and set the foundations for the con.


This trust can be fostered through providing fake third-party verifications, which all-too-often results in people dropping their guard when speaking to a stranger about their pension.

This is compounded by the fact many people are not confident they have enough in their retirement pot and so may be prone to fraudsters claiming to offer ultra-high investment returns.

Having built trust and hawked their investment ‘opportunity’, fraudsters will convince their victim to give them large chunks of their retirement cash. Often these investments will be entirely fictitious, meaning savers handing over their money risk losing everything.”


The most commonly used tactics of pension scammers to be aware of include*:

  • the offer of a free pension review
  • promises of higher returns, where fraudsters say they will guarantee they can get you better returns on your pension savings
  • help to release cash from your pension even though you’re under 55. An offer to release funds before age 55 is highly likely to be a scam, and will result in you being hit with an eye-watering tax penalty from HMRC
  • high-pressure sales tactics, where the scammers may try to pressure you with ‘time-limited offers’ or even send a courier to your door to wait while you sign documents
  • unusual investments – these tend to be unregulated and high risk, and may be difficult to sell if you need access to your money
  • complicated structures where it isn’t clear where your money will end up
  • arrangements where there are several parties involved (some of which may be based overseas) all taking a fee, which means the total amount deducted from your pension is significant
  • long-term pension investments – which mean it could be several years before you realise something is wrong

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