Beware the pensions review scammers
Consult one of these 'experts' and your retirement plans could be ruined.
About a quarter of my home phone calls are rubbish, despite signing up for the Telephone Preference Service, but it feels a whole lot more.
This week, it's been pre-recorded messages. And they weren't the usual ones inviting me to put in a PPI claim or try for accident compensation or pushing the pleasures of a cruise from Miami.
Instead, they told me that my pension plan was garbage and that my only chance of a happy retirement was to consult an “expert”.
Scammers stepping up the pressure
I've had these offers of a “full pensions review” on and off for a time. But the intensity has increased. I am not surprised because of radical changes in pensions provision. The introduction of workplace pensions, or auto-enrolment if your prefer, is gathering pace and is now reaching smaller employers – those who are likely to have far less pensions expertise than bigger firms.
The decision to allow everyone to do what they like with their pensions pot on retirement is even more crucial. These can be big sums – almost always in five figures and sometimes well into the hundreds of thousands. They are sometimes held by people who have little experience of finance and who probably have never had to deal with amounts that large.
So they are prime targets for scam merchants who happily substitute their dishonesty for the unbiased advice that the Government has promised to those retiring once annuities are no longer the compulsory route for all bar the very richest.
Regulator warning
This week, the Financial Conduct Authority regulator issued a clear warning on so-called 'free pensions reviews'.
The 'review' may be free but the consequences are not. You could end up with your entire pension in some of the rubbish investments that I have exposed here week after week: trees in Tanzania, property in Paraguay, holiday homes in Haiti, carbon credits in China, or diamonds, development land, rare earth minerals, wine and almost anything else anywhere in the world that you can overprice and overhype.
The most recent scam is 'storage', where you are offered huge returns on 'pods' where other people keep their surplus belongings (not to be confused with the legitimate storage companies in most areas).
These are investments which are easy to buy, but impossible to price and impossible to sell for more than a tiny fraction of what the dodgy dealers demand. And there is no point complaining afterwards. The criminals will have flown to far flung places and put your cash into secret offshore bank accounts. There is no compensation scheme.
There are practically no rules on what can be held in a pension plan. So fraudsters often say an asset is 'HMRC approved'. There is no such thing because there are no restrictions so anything goes. And as there are no prohibitions, the FCA has to accept this and so scamsters can say they are 'FCA Compliant' when there is no such thing. Fall for these people and bang go your life savings.
Tracey McDermott, FCA director of enforcement and financial crime, is very clear. "People should be very wary if they are contacted out of the blue by someone offering a 'free pension review'," she said. "Most of the companies offering this 'service' are not authorised by us, and we're concerned that the reviews often end with pension pots placed in higher-risk, unregulated investments.
"If you see or receive offers of 'free pension reviews', just ignore them. If you are called out of the blue to discuss your pension, just hang up. Your pension is far too important to be put in the hands of a cold-caller."
Attack of the clones
Besides phone calls, these criminals use email, text message or online adverts. As well as falsely claiming to be FCA authorised, they may even clone the details of legitimate companies.
McDermott adds: ”Some claim they are acting on behalf of the Government in relation to the recently announced commitment to introduce a service to provide free guidance for people at retirement. This initiative has not been launched yet and therefore claims to be linked to it are highly unlikely to be true.”
She has to keep her language within certain parameters, but I can say for her that for “highly unlikely” read “100% impossible”.
If you want advice on pensions savings or a pension pot, there are many legal regulated advisers. Never discuss your finances with anyone who has contacted you out of the blue – whether it is about a pension or anything else.
More on scams:
Dodgy lawyers running off with Stamp Duty payments
The sneaky Companies House scam
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