Tom Selby, head of retirement policy at AJ Bell, was one of the earliest and most vocal campaigners for a pensions cold calling ban in the UK.
Selby comments: “Financial scams are a scourge on society and ruin lives, so any move to protect more consumers from different types of fraud is extremely welcome. Governments cannot stop scams altogether, but they can place significant barriers in the way of those intent on committing fraud.
“An estimated £750 million was stolen through investment fraud last year. These scams will often begin with an unsolicited approach from someone via phone, text message, email or on social media. As the government notes, a mish mash of rules and regulations mean it can at times be less than clear when a cold call is against the law and when it is not. One of the benefits of a wider cold-calling ban would be that everyone is absolutely clear that if they receive a call out of the blue about their finances, they should hang up the phone.
“For this cold-calling crackdown to work we need two things: tightly worded legislation, to ensure nefarious contacts are specifically targeted, and a legitimate threat of enforcement where someone breaks the new rules. The plans also need to go hand-in-hand with greater responsibility being taken by internet giants like Google for paid-for scam adverts, something which the Online Safety Bill can hopefully bring into UK legislation.
“The successful campaign to ban pensions cold-calling in 2019 was never supposed to be just about pensions. We have always warned that the vast majority of fraud takes place outside of pensions, usually in the form of investment ‘opportunities’ that turn out to be at best missold and at worst entirely non-existent.
“The ban on pensions cold-calling therefore needed to be seen as the beginning of a wider effort to tackle scams more generally and beef-up education. The pandemic and the subsequent cost-of-living crisis have both resulted in rising vulnerability in the UK which, depressingly, is like blood in the water to fraudsters. The pandemic in particular has also, understandably, likely meant progress in tackling scams has not been as fast as some would have liked.
“The grim reality is that, even with new rules and tough enforcement, scammers will continue their attempts to plunder people’s hard-earned savings. It is therefore vital, regardless of what the government does, that Brits keep their wits about them and are cautious when they are contacted out of the blue by someone they don’t know about their finances. Much of this is common sense, but it could save you from financial misery.”
Here are some steps you can take to help avoid being scammed:
1. If someone contacts you out of the blue to talk about your finances, hang up!
Most people at some point will have received a phone call, text message or email 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.
2. 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.
3. 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 America 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.
4. 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.
5. 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 salesperson 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.