How can you protect your clients from pension scams?

For intermediaries only

The FCA have recently published an article stating that 5 million pension savers could put their retirement savings at risk to scammers(Opens new window). They've also built a pensions scam quiz(Opens new window) where your clients can see how scam savvy they are. 

Some investments may seem exciting and unusual, often offering high guaranteed returns, but if it seems too good to be true then it probably is. Often these are unregulated investments sold by unregulated advisers and if things go wrong your clients won’t be protected by the Financial Ombudsman Service or the Financial Services Compensation Scheme. 

This issue is so endemic that both the Financial Conduct Authority and the Pensions Regulator are trying to raise awareness of potential scams and ways to avoid them. People who see themselves as financially savvy are just as likely to be persuaded by fraudsters. To help you raise awareness with your clients, we’ve created these infographics for you to download and share. 

To make sure they’re protected from fraudsters, the biggest thing your clients should focus on is how they respond to any unsolicited contact. Whether contact is by post, email, text or telephone they should immediately be wary of anything that arrives unexpectedly. 

If your clients are in any way uncomfortable, then the safest thing to do is to hang up the phone, delete the message or ignore the mail. But they need to be careful about using the unsubscribe option in emails as this can alert fraudsters that they have the right contact details. Even if they decide to read on or speak to the caller, it’s important for them to remember that they’re in the driving seat. 

They should ask for the firm’s registration number and get contact details. Have a look at the Financial Conduct Authority's warning list(Opens new window) and do some online research into the business and its directors. 

Of course, it’s critical that clients understand the tax implications of what they’re about to do. For example, if they inadvertently transfer their pension overseas and they live in the UK, they may need to pay a 55% tax charge, in addition to other fees. 

Our checklist for your clients: 

Don’t:

  • give out their personal information when contacted unexpectedly;
  • be rushed into anything, tell them to take time to think;
  • sign anything unless they fully understand what they're signing up to, and 
  • let anyone into their house unless they're sure they're genuine.

Do:

  • tell them to research any firm that contacts them;
  • check the FCA warning list;
  • seek out regulated financial advice;
  • take their time over financial decisions, and
  • assess the tax implication of any decision.

Your clients can also visit the ScamSmart website(Opens new window)(Opens new window) for further information, including hints, checklist and case studies.