Savers too trusting of advice, regulators warn

Savers too trusting of advice, regulators warn

The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) have warned savers are too trusting of 'advisers' who call them out of the blue, as they reignited their joint pension scams campaign.

The regulators found almost two-thirds of savers would trust someone offering pensions advice out of the blue and warned they could lose an average of 22 years of savings within only 24 hours.

Analysis, published today (November 8), as part of the regulators’ joint ScamSmart campaign, showed it took 22 years for an individual to build a pension pot of £82,000, which is the average amount victims lost to scams in 2018. 

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This compared with an average loss of £91,000 each in 2017.

The survey, which consisted of 4,000 savers aged 45-65 with a pension, also found a quarter of people admitted to taking a mere day or less to decide on a pension offer.

The more financially savvy were also at risk of falling for scam tactics.

Those with a university degree were 40 per cent more likely to accept a free pension review from a company they’ve not dealt with before, and 21 per cent were likely to take up the offer of early access to their pension pot, the regulators found.

Overconfidence often led to savers missing the signs of a scam, the regulators stated.

Despite nearly two-thirds saying they were confident to make a decision about their pension, the same proportion would trust someone offering pension advice out of the blue.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “We know many people have big plans for their retirement, whether it’s seeing new places, learning new skills or helping their families out financially.

"Pension scammers destroy those dreams, often forever. So be ScamSmart. 

“Reject unsolicited approaches offering ‘help’ with your pension and get advice from an FCA authorised firm before making big changes to your pension fund.”

The ScamSmart website gives tips on how to spot the techniques used by fraudsters and hosts the FCA warning list of firms and individuals that the FCA knows are operating without its authorisation. 

Tom Selby, senior analyst at AJ Bell, said hubris and trusting the advice of strangers have proven to be the undoing of scam victims.

Mr Selby said: “This is a recipe for disaster as fraudsters prey on the good nature of hard-working savers.

“Sadly, despite interventions from government and a drive to raise awareness, scammers aren’t going anywhere, so savers need to be more suspicious when they receive offers out of the blue.

“For many people their retirement pot could well be the most valuable thing they own, so spending a bit of time researching before parting with it could save a lot of pain.”

James Jones-Tinsley, self invested pensions specialist at Barnett Waddingham, said: “It is both welcome and timely to see the FCA and TPR re-energising their ScamSmart activity, as well as providing statistics that certainly act to concentrate the mind in revealing how susceptible consumers – from all walks of life – can be in falling for a scam.