In its second annual perimeter report published today (September 29) the Financial Conduct Authority said it was still seeing evidence of firms offering free pension reviews, but often using social media to contact unsuspecting consumers.
The regulator said: "At times, it can be difficult to establish what is being covered in these reviews, but there are indications that they can be instrumental in consumers deciding to transfer or switch out of their existing pensions, potentially losing major benefits in the process or being exposed to high-risk or illiquid investments.
"Such harms can also arise where introducers encourage consumers to take out high-risk or illiquid investments in a self-invested personal pension wrapper."
The FCA also said unregulated firms were also turning to the online world to introduce consumers to high risk investments, in an emerging theme it has already attempted to curb with the introduction of a temporary ban on the marketing of mini-bonds to retail investors.
The regulator is currently consulting to make this ban permanent amid concerns over "unexpected and significant consumer loses".
It means products which fall under the ban could only be marketed to investors who firms know are "sophisticated or high net worth" and promotions by an authorised firm will have to include a specific risk warning.
But in a 34-page call for input published earlier this month the FCA warned it had found evidence of firms “coaching” people through these exemptions in order to sell their products.
In today's report the FCA repeated its concerns, stating: "We are particularly concerned that some unauthorised introducers are relying, or at least purporting to rely, on the exemptions for promotions to high net worth and sophisticated investors, in order to promote high-risk investments to consumers for whom such products are likely to be inappropriate.
"We have also seen evidence of firms abusing these exemptions by ‘coaching’ people through them. Investors who do not, in practice, meet the tests set in legislation are being ‘pushed’ through them, often by unregulated firms.
"This unscrupulous behaviour is sometimes helped by the appeal to some retail investors of self-certifying themselves as ‘sophisticated’ or ‘high net worth’ and the sense of exclusivity that the exemptions provide.
"Where this occurs, investors are not getting the protection of our rules when they should be."
But the regulator admitted it was "inherently difficult" to police this type of behaviour as it often involved unauthorised individuals who were difficult to trace and sometimes based overseas.
As part of a wider theme of its report the FCA predicted the coronavirus crisis was set to exacerbate specific perimeter issues and "encourage unlawful activity, impacting vulnerable consumers and SMEs especially".