Pension fraud reports down 80%

Pension fraud reports down 80%

The number of pension frauds reported to the police has dropped by 81 per cent over five years.

A freedom of information request by AJ Bell to the National Fraud Intelligence Bureau, published today (August 14), showed the number of reports continued to decline each year with 1,828 complaints received in 2013, compared with 345 in 2018.

In the first six months of this year the government body received 215 pension scam reports, suggesting that the pensions cold calling ban, which was introduced in January, has started to take effect.

The financial losses from these scams totalled £96.6m in 2013, compared with £14.1m in 2018. So far fraud this year has cost consumers £6.9m.

In contrast, the number of investment fraud reports has increased in the period with more than 8,000 cases having been reported in the first six months of 2019 alone.

The FOI revealed that in 2013 6,908 reports of investment fraud were received, increasing by 36 per cent to 9,398 in 2018.

Tom Selby, senior analyst at AJ Bell, said: “Financial fraud in the UK is mutating, with the number of victims of older-style ‘pension liberation’ scams dropping in recent years on the back of a series of government interventions – including the ban on cold-calling – and a significant industry-wide public awareness campaign.

“However, as pensions-based scam reports have fallen, the number of people falling prey to scams focused on their investments has continued to rise and look set to hit record highs in 2019.

“This might reflect the fact more people are now reporting being scammed to the relevant authorities, or it could be because fraudsters have shifted their focus to investment-based schemes.”

Mr Selby said the shift in focus to investment fraud raised questions about the government’s decision to exclude investments from the cold-calling ban.

He added: “Although cold-calling is just one tactic scammers use to target savers, it remains a common one which preys on the most vulnerable in society.

“The regulator must also continue its awareness-raising efforts to ensure people know fraudsters remain active and after their hard-earning cash.

“Rather than waiting for the government to intervene, the best way for people to avoid being scammed is to tool up their knowledge so they can protect themselves.”

Last week (August 5), the Work and Pensions select committee told the Financial Conduct Authority (FCA) to “widely publicise” its list of unauthorised firms and to review the resources it dedicates to pension scams.

The MPs recommended that the regulator reviews “whether it dedicates sufficient resource to combat active pension scams, prevent new pension scams and protect individuals”.

The Pensions Regulator and the FCA also warned that more than 5m pension savers (42 per cent) were likely to fall for at least one of six tactics used by pension scammers, with the financially savvy just as likely to be fooled.

People who are actively seeking ways to boost their retirement income are even more likely to fall for scammers’ tricks, with 60 per cent likely to be tricked.