FCA warns against ‘free pension reviews’ cold calls

The Financial Conduct Authority has published a consumer alert warning people to be wary if they are offered a ‘free pension review’ out of the blue and encouraged to move their pension to get better returns.

In a consumer alert published today (21 May) the FCA said it has evidence people are being contacted unexpectedly and offered a ‘free pension review’.

The FCA said this could be via a phone call, an email, text message or an offer in an online advert.

Most of the companies making these offers are not authorised by the FCA, “though they often falsely claim they are acting on our behalf”, the regulator warned.

These reviews are designed to persuade consumers to move money saved in existing personal or occupational pensions to a self-invested personal pension or a small self-administered scheme.

The pension pot is then typically invested in unregulated investments like overseas property developments, forestry or storage units known as store pods, the regulator said.

The FCA said it has also heard that some callers claim to represent the government after its announcement to introduce free retirement guidance.

The FCA advised consumers who are called out of the blue about their pension to “just hang up”.

Authorised financial advisers offering advice that is impartial and in their clients’ best interests “are very unlikely to cold call offering their service”, the regulator said, adding that professional pension advice “is not free”.

The FCA warned “you could lose everything you invested, significantly reducing your retirement income”.

Two years ago, FTAdviser revealed that a Gibraltar-based company that facilitated “cash gifts” to individuals that transferred their pensions into biofuel and woodland investments has ceased trading and has applied to be struck off from the territory’s companies register.

This followed an FSA review alert on the firm in February 2012.

Tracey McDermott, director of enforcement and financial crime at the FCA, said: “People should be very wary if they are contacted out of the blue by someone offering a ‘free pension review’.

“Most of the companies offering this ‘service’ are not authorised by us, and we’re concerned that the reviews often end with pension pots placed in higher-risk, unregulated investments.”