A new survey for the regulators’ joint and laudable ScamSmart campaign found that 22 years of pension savings could be stolen by scammers in as little as 24 hours.
Suprisingly, the survey found that more highly educated people were more at risk than other sections of society.
They are likely to have larger pension pots and, perhaps, be more gullible when it comes to accepting what they perceive to be ‘professional advice’ offered by a scam firm.
The survey found that those with a university degree were 40% more likely to accept a ‘free pension review’ from a company they have not dealt with before and 21% were more likely than the average person to take up the offer of early access to their pension pot than the average.
The most astonishing figure was that 63% of the 2,000 people surveyed, nearly two in three, would ’trust’ an approach from someone offering pensions advice out of the blue, potentially a cold caller.
On average pension savers lost £82,000 per scam in 2018, a horrifying amount. There is no doubt some people will never recover financially or personally from that sort of loss.
All of this is proof that when it comes to pension scams no-one is safe.
So what’s to be done and what role can Financial Planners play?
Firstly, a lot is being done and the ScamSmart campaign is helping build awareness and credit to the FCA and TPR. Their TV commercials are particularly effective and their website is useful
Financial Planners also have a role to play. They are not the guilty parties here, far from it and many play a valuable role in warning clients through social media and newsletters.
But the fact is that the vast majority of pension scams are perpetrated by crooks posing as financial advisers of one sort or another. Each scam damages the professional reputation of Financial Planning whether we like it or not. The public simply do not know who to trust.
The professional bodies could do more and there is also more providers and government could do. Many of these scams involve the transfer of pension pots to overseas domiciles to ‘unlock’ the cash.
We need systems in place that suspend any movement like this for at least a month while a professional expert is called in to review the transaction before it goes ahead and ensure the pension savers know the risks. Ensuring this expert is a suitably-qualified Chartered or Certified Financial Planner or equivalen expert would be a huge step forward.
If a pension system allows an entire life savings of pensions to be transferred within 24 hours it is fundamentally flawed and needs to be reformed.
Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with 30 years experience. This topical comment on the Financial Planning news appears most weeks.