Pension scams: calls for better protection for those at risk
Older people and vulnerable groups are more at risk of pension scams and it's time to tackle the problem.
MPs are warning vulnerable older people of scams following the introduction of pension freedoms last year.
The freedoms allow savers to have more of a say in what happens to their pension. Read Pension freedoms: all you need to know for more.
Though they welcome the more liberal pensions system, MPs are worried that the freedoms have attracted a new wave of scammers. A House of Commons debate was held on September 8 to discuss the issue.
Julian Knight, MP for Solihull, told New Model Adviser ahead of the debate that the Financial Conduct Authority (FCA) needs to stop ‘pussyfooting’ around rogue pension introducers, encouraging the watchdog and other regulators to tackle these companies.
He also said that to beat pension scams more work is needed to control data to stop it being passed on and provide more clarity on where data is being passed on to.
MPs highlight that vulnerable people such as the elderly, those with mental health problems and those with dementia are more likely to be targeted by criminals. Research done by Age UK in 2015 suggests that 53% of people aged 65 and over believed they’d been targeted by fraudsters.
Scams involving fake investment opportunities are among the most common and harmful when they involve life savings of elderly people.
But Knight says that it’s not just about the money; being scammed also has a damaging effect on the victims’ wellbeing. Research from software provider Truecall found that 29% of victims suffer a major depressive episode within 20 months of being scammed, compared to just 2% of non-victims.
Is it enough?
Following the debate, AJ Bell’s senior analyst Tom Selby spoke out against the Government’s unwillingness to ban cold calling:
“The case for banning cold calling couldn’t be clearer – the pension freedoms, while providing welcome freedom and choice to savers, offer a gateway for fraudsters to steal money from people. If you stop people contacting pension savers in the first place, you cut off one of the heads of this many-headed snake."
Selby also said that the Government should review the regulation of Small Self-Administered Schemes (SSAs) and reintroduce a ‘sensible permitted investment list’ for SIPPs.
“It’s time the Government ditched mealy-mouthed platitudes and starts using the weapons at its disposal to take the fight to financial criminals.”
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