THE long-awaited ban on pensions cold-calling to prevent scammers in the UK making unrequested calls to savers is finally here.
It came into force on 9 January 2019, and It's hoped that it will bring extra protection against fraudsters who target the millions of people who save into a pension – the biggest single source of private wealth in the UK.
How to avoid the pension review scam
The ban on pensions cold calling
Pensions fraud has been rife since the introduction of pension freedoms in April 2015, and can leave victims with no money for their retirement. Some 10.9 million unsolicited pension calls and messages are made a year, according to Citizens Advice, leaving people at risk of losing their savings.
The latest figures available from the Financial Conduct Authority (FCA) show that victims of pension scams lost an average of £91,000 each in 2017.
Pension scams start with an unexpected call, text, social media approach or email – offering a free pension review, or a way to make attractive returns on pension savings.
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But the money may be transferred into a high-risk scheme completely inappropriate for retirement savings or simply stolen.
Many offer eye-catching returns or high-rolling investments in hotels or green energy schemes that never materialise, or instead lead to losses.
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Scammers face fines of £500,000
The Government first stated its intentions to help in November 2016 and after much deliberation the ban, which covers unsolicited calls, texts and emails, is now in place. Any perpetrator could be subject to a fine of up to £500,000 should they flout the rules.
How to avoid phone scams
Experts concede that while the ban is good news, there is no room for complacency and that public awareness remains crucial.
Margaret Snowdon, chair, PSIG
Kay Ingram, director of public policy at advice group LEBC said: “It has always been illegal to steal someone else’s pension funds and the cold calling ban of itself will not deter determined criminals. Its success will depend upon the public having confidence that no legitimate adviser or pension provider would approach them in this way.”
Margaret Snowdon, chair of The Pension Scams Industry Group (PSIG), said: “A ban on cold calling will not deter all scammers, but anything that makes it more difficult is a good thing.”
She adds: "A significant public awareness campaign will now be vital to ensure that the man in the street is aware that cold calls about their pensions are now illegal.”
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Five top tips to protect your retirement savings
1 Give cold-callers the cold shoulder
If you receive unsolicited contact about your pension, end the phone call, delete the email or the text. Scammers might even claim they’re from a Government-backed body. Remember, these organisations would never phone or text to offer a pension review.
2 If something looks too good to be true…
…it probably is. Don’t be taken in by smart websites or brochures – professional-looking marketing materials are not a guarantee of a company’s authenticity. Watch out for unregulated investments offering ‘guaranteed returns’. And don’t be rushed into making a decision. It’s important to remember that for savings that take 40 years or so to accrue, no-one should not feel rushed into action. Visit the FCA’s Scamsmart website to see if the deal you’re being offered is a known scam or has the hallmarks of a scam.
3 Make sure your adviser is registered
Scammers sometimes pose as financial advisers. Check your adviser is registered on the FCA website, and that they’re authorised to give advice on pensions. If you deal with someone who is unregulated you may not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.
4 Don’t let a friend talk you into an investment – check everything yourself
People have fallen for scams because they have been recommended by a friend. Do your homework, even if you consider yourself or your friend to be financially savvy.
5 If you think you’ve been scammed – act fast
If you've already signed something you're now unsure about, contact your pension provider straight away. They may be able to stop a transfer that hasn't taken place yet. If you have doubts about what to do, ask The Pensions Advisory Service for help. Call them on 0800 011 3797 or visit the TPAS website for free pensions advice and information. You can report a scam to Action Fraud online or by calling 0300 123 2040.
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