ScamsJul 7 2021

FCA revamps scams campaign as further £2m lost to fraud

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FCA revamps scams campaign as further £2m lost to fraud

A total of £2.2m has been lost to pension scams in the first five months of 2021, with the regulator warning savers are nine times more likely to accept ‘advice’ from someone online than a stranger in person.

Research from the Financial Conduct Authority, published this morning (July 7), found savers are significantly more likely to be fooled by scammers' tactics online than they would face to face.

The average loss to pension scams this year was £50,949, according to complaints filed with Action Fraud - more than double last year’s average of £23,689.

Scammers targeted pension pots big and small, with reported losses ranging from under £1,000 to as much as £500,000. 

The regulator found pension holders were nine times more likely to accept advice from someone online than a stranger they met in person and five times more likely to be drawn in by a free pension review from a stranger online than someone in their local pub.

In response to this the regulator revamped its scams campaign urging savers to “flip the context”.

It said imagining receiving the same approach about their pensions online as while enjoying a quiet pint in their local pub would make scams easier to spot.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Imagine a stranger in a pub offering free pension advice and then telling you to put those savings into something they were selling. It is difficult imagining anyone saying yes to that.

“It’s no different online. Whether you’re on social media or checking your emails, if someone offers you free pension advice, ‘flip the context’ and imagine them doing the same thing in real life. Stop and think how you would react."

The FCA found half of pension savers would be unlikely to make an ‘impulse buy’ in general but despite this, more than a third (36 per cent) were unable to recognise time-limited offers as a sign of a pension scam. 

More than two thirds of savers (68 per cent) claimed they were confident they could spot the signs of a pensions scam, but the FCA found this confidence may be misplaced. 

When quizzed, only around a quarter (28 per cent) realised that a free pension review was a sign of a scam, and just 40 per cent knew to be wary of opportunities to transfer a pension.

Whether you’re on social media or checking your emails, if someone offers you free pension advice, ‘flip the context’ and imagine them doing the same thing in real life.--FCA

The regulator said this was particularly concerning, as over-confidence can lead to savers letting their guard down and failing to check any firm they deal with is on the FCA warning list.

Covid has also played a role as more than a quarter of savers now feel more at risk of falling for a pension scam than before the pandemic.

Of those who felt more at risk, nearly two thirds (65 per cent) felt that scam tactics had become more sophisticated and harder to spot during the pandemic. 

Dr Linda Papadopoulos, a psychologist who is supporting the ScamSmart campaign, said: “Scammers will use behavioural tactics to trick you into a false sense of security. Often these criminals will manipulate and persuade you to do things in the moment, which ordinarily you would feel suspicious of in a more familiar setting, such as a shop or local pub.

“It is important when approached with a financial offer on your pension, to take yourself out of the context or pressure of that moment. We know that people wouldn’t accept a free financial product in a pub or would be unlikely to make a purchase in a random flash sale – so why risk it with your pension?”

Tom Selby, senior analyst at AJ Bell, said the numbers were “shocking” but this was only “the tip of the iceberg”.

Selby said: “Most scams occur outside of pensions nowadays, with retirement savers over age 55 who can access their retirement pot flexibly one of the prime targets for fraudsters.

“We also know that the coronavirus pandemic has led to an increase in vulnerability, with more than 27m adults in the UK demonstrating characteristics of vulnerability such as poor health, negative life events, low financial resilience or low capability.

“Depressing as it is, scammers prey on this vulnerability to try to fleece people out of their hard-earned retirement savings.

“While steps have been taken to protect pension savers, government and regulatory interventions can only do so much. It is vital individuals take responsibility, be careful before parting with their money and take the time to know the tell-tale signs of a scam.”

amy.austin@ft.com

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