How to avoid pension and investment scams

Avoid pension and investment scams

As the saying goes, if something is too good to be true, then it probably is… Knowing how to avoid pension and investment scams is crucial if you want to protect your hard-earned cash. Sadly, financial crime has increased substantially over recent years. So, it’s important to know how to spot a fraudulent scheme so you don’t lose any money.

Firstly, we’ll never message you out of the blue about an investment opportunity or ask you for your bank account details before speaking to you first. If you’re in any doubt, call our office as soon as possible.

“The biggest increase in those reporting investment scams over the last 12 months came among 35- —to 44-year-olds, with cases jumping by more than half (52%).”

Lloyds Bank

What are common financial scams?

In life, quick wins are rare unless you’re a lottery winner. Investors will see their investments rise and fall in relation to market trends and shocks. Therefore, an effective investment strategy relies on a long-term approach and diversification. This includes a mix of bonds, stocks and shares across various asset classes. So, when someone approaches you with an investment opportunity that sounds like a get-rich-quick scheme, this is a big red flag.

Also, as a type of long-term investment, pension schemes are not designed to provide you with a short-term gain. Plus, if you withdraw your pension without the correct advice you might also face a large tax bill. Unfortunately, most pension scams result in money being stolen.

Below is a list of the current types of scams and warning signs:

  • Pension scams – typically, this could start with a “free review” from a company you have not heard of via social media or a phone call. You might be offered a better return on your pension savings, through an unusual or complicated “investment opportunity”. Usually, there is a degree of high-pressure sales tactics and deliberately confusing language. There are likely to be several groups taking fees, including from bogus overseas entities.
  • Investment scams – there are several types of fraudulent schemes. Fake crypto investments are offered using manipulative software to persuade you to invest. Share, bond and boiler room scams are where worthless or non-existent shares or bonds are bought or sold, and people lose their entire life savings. Land banking is when you are contacted to invest in a plot of land that will generate significant profits once planning permission is granted. Permissions are never granted, and development never happens. There are also notorious Ponzi and pyramid get-rich-quick schemes, where investors are promised high returns and offered paid commissions for recruiting more investors. The scheme then collapses and investors lose all their money.
  • Screen-sharing scams – this is where someone contacts you pretending to be from a fraud department or a trusted organisation. They will ask you to download some software and share your screen, which can give them full access to your accounts.
  • Loan fee frauds—This type of scam targets people who have been applying for loans and often have bad credit ratings. They will offer a loan on the false premise that an upfront fee has to be paid. The fee is taken, but the loan isn’t provided.

Fraudsters are increasingly using sophisticated means to commit financial crimes. There is also a rise in ‘recovery room’ scams, where victims of fraud are targeted to “help them get their money back”.

Never feel pushed to transfer your pension or savings into any type of investment scheme. Always check the authenticity of the financial adviser. Trusted professional firms are listed on the Financial Services Register:

ScamSmart – Financial Conduct Authority

As part of its commitment to tackling pension and investment fraud, the Financial Conduct Authority (FCA) has produced ScamSmart. This website has a series of online tools and guides to help you avoid becoming a victim of a scam.

Below is a list of the different types of guidance they provide:

  • The FCA Warning List – this is a helpful directory with a list of unauthorised people and firms that are not allowed to operate in the UK.
  • Spot the warning signs – the FCA has a step-by-step guide to help you stop and consider whether a fraudster is trying to scam you.
  • Fake FCA communications – even the FCA is being targeted with customers receiving fake emails and phone calls. This help page offers useful insights so you can spot fake communications and bogus websites.
  • Report a scam – this FCA help page offers various ways to report a potential scam, so you can protect yourself and others.

As well as checking the ScamSmart website, if you’re in doubt about a potential investment scheme, ask our financial planners. This also applies to concerns over a family member or friend, especially older people. They are at greater risk of losing the most amount of money.

“Victims aged between 65 and 74 lost an average of £30,397, more than any other age group.”

Lloyds Bank

Financial Advisers, Nottingham and Lincoln

Before you make any hasty decisions about a pension or investment scheme, stop and check if it’s a scam. It’s important to never feel rushed or pushed into moving your money. Always check the authenticity and integrity of the financial individual or firm presenting the so-called opportunity. Sadly, a wrong decision could rid you of your retirement income.

Based in Nottingham and Lincoln, our team provide trusted financial advice on pensions, investments, savings and protection. We will help you safeguard your hard-earned wealth, ensuring you don’t fall victim to any fraudulent schemes.

If you are worried that a potential pension or investment opportunity could be a scam, get in touch as soon as possible.