How can you protect your clients from pension scams?
For intermediaries only12 September 2018
Pension scams have been around for some time, but the pension freedoms that came into force on 6 April 2015 potentially make the over 55s a soft target. So if your clients fall into this category it’ll pay to help them stay alert.
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. To help you raise awareness with your clients, we’ve created these infographics for you to download and share.
To ensure they’re protected from fraudsters, the biggest thing your clients should focus on is how they respond to any unsolicited contact. Whether it comes via post, email, text or telephone they should immediately be wary of anything that arrives from out of the blue.
If your clients are in any way uncomfortable, then the safest thing to do is to hang up the phone or delete the message. But they need to be careful about using the unsubscribe option 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 register 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.
Aegon’s checklist for clients:
- Give out personal information when contacted out of the blue
- Be rushed into anything
- Sign anything unless you fully understand what you’re getting into
- Let anyone into your home unless you’re sure they’re genuine
- Research any firm that approaches you
- Check the FCA warning register
- Seek out regulated financial advice
- Take your time
- Assess the tax implications of any decision
Clients can also visit the ScamSmart website(Opens new window) for further information, including hints, checklist and case studies.