The government’s cold-calling ban will not stop ever evolving pension scams, which have found different ways of contacting their victims, the chief executive of the Pension Advisory Service (Tpas) has said.
Michelle Cracknell told advisers at Dentons Pensions annual event in London today (21 March) Tpas was receiving “increasing evidence” consumers were being contacted in other ways.
New tactics include contacts via social media, including Linkedin, as well as from existing working relationships, for example with a payment protection insurance claims company.
She warned finding the victims was easy and changing all the time but the scams themselves had changed too.
Ms Cracknell said: “I welcome the ban on cold-calling but we have increasing evidence that people are being contacted through other ways.
“Linkedin, social media, all of these places are currently being used to get to people and to talk to them about having a pension review.
“Cold-calling will certainly reduce the number of calls I get on my mobile but it’s not going to stop pension scams. The pickings are too rich.”
Ms Cracknell warned most scams nowadays were “legal”, which made it hard for providers to stop them.
She said: “The providers of schemes can’t actually stop them from happening because most of them are going into legal vehicles from which there are some really horrid, nasty, inappropriate investments being made.”
For instance, unlisted shares, which are perfectly suitable for some investors, are used to scam people, she said.
The Financial Conduct Authority (FCA) warned of what it called ‘smarter scams’ in an update on its website in January last year when it spoke of an “evolutionary process [that] appears to be to obscure the nature of the ultimate underlying investment.”
The regulator mentioned special purpose vehicles (SPV), set up to acquire unregulated assets using funding raised by the issue of corporate bonds, as a concern.
Investment portfolios that do not require the direct input of the investor, which are set up by a discretionary fund manager and then invest in SPV bonds, were also cited.
Ms Cracknell told advisers to hammer home the point that people should hang up on anyone contacting them about any aspect of their pension.
“Always contact somebody that you chose about your pension, never do it the other way around,” she said.
She added: “We need to be really careful that small self administered pensions and self-invested personal pensions don’t get a bad name, the second thing is being really clear about [the different parties’] roles and responsibilities.
“You need to be really clear with customers to spell that out because if something goes wrong mud gets flung and if you’re a decent chap who still answers their phone you’ll probably pick up more of the mud just because you are one of the people who hasn’t gone underground.”
The Department for Work and Pensions (DWP) is in the process of introducing a cold calling ban on pension calls.