Since the pandemic began we have experienced an unprecedented period of enforced change.
The majority of individuals and businesses have reacted extremely well to this, but one of the major downsides has been a marked increase in vulnerability.
Wellbeing has been severely tested by unprecedented market volatility, recession and resultant unemployment and, on top of this, opportunities for criminals to prosper have multiplied.
The National Fraud Intelligence Bureau has estimated that, since the outbreak of Covid-19, more than £7m has been misappropriated from pension holders through the actions of scammers.
In many respects, the introduction of pension freedom and choice has represented a unique opportunity for the financial planning and investment management industry.
If the process is managed well, individuals stand to benefit longer term and with much greater flexibility than they did before. But we are also aware of the significant risks that freedoms represent to some consumers – especially those who are non-advised.
Key Points
- Since the outbreak of Covid-19, more than £7m has been lost to scammers
- There are three activities that must be improved to safeguard retiree savings: education, professional support, and regulation
- Proactive regulation is key in tackling the issue of scams
As you will have seen, the Work and Pension Committee has recently launched a three-part inquiry looking at the impact of pension freedoms five years on, with the first part looking at scams and what can be done to prevent them.
Much like the WPC’s three-part inquiry, trade body Pimfa’s recommendations as to what can be done are also rooted in three distinct activities that must be improved in order to safeguard the savings of UK retirees: education, professional support, and better regulation.
Education is key. People need to be made aware of what to look out for in a potential scam; what the key signs are and, importantly, what legitimate providers and distributors would never do when contacting a client.
To this end, Pimfa has launched the Scam Safe campaign and set up a microsite for savers who may have been approached, which is publicly accessible. To its credit, the Financial Conduct Authority has also produced the Scam Smart site, which is excellent, informative and easy to follow.
In many instances, social distancing and self-isolation have played a large role in eroding individual support networks. In this context, the role of financial planners and the value of advice is pivotal.
We have received substantial feedback from the companies we represent about cases where the intervention from an adviser or wealth manager has helped save someone from a potentially disastrous outcome.
Clearly, not everyone has access to an adviser or wealth manager and, to this end, the role of government guidance providers is key too.
Finally, proactive and targeted regulation is vital. It is essential that the relevant authorities are able to crack down on unregulated investments and clearly fraudulent pursuits as quickly as possible. By doing so, significant consumer detriment can be avoided.
Like it or not, the prevalence of scams has a direct result on levels of trust that people have in the financial services industry.
The challenge for this industry and others is to ensure that it is our actions that continue to engender trust among savers, our clients and beyond.
Our members understand that their role is as much to protect their clients from malicious fraudsters as it is to help grow assets and aid people in planning their financial futures.
There have been a number of stories of this industry doing just that.
As we move towards a new phase in this pandemic, remaining vigilant to spotting the ‘too good to be true’ claims, and reporting them to the FCA, is very much part of the role of businesses up and down the country.
That companies will continue to help and protect savers now and into and their retirement goes without saying. What you can be assured of is that Pimfa will continue to promote the value of the industry and to influence the optimal operating environment so you can continue to do what you do well.
Liz Field is chief executive of Pimfa
