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How to spot an investment scam

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Pensions are something we often hear about, whether it’s in regards to having one, getting one or the auto-enrolment workplace pensions that have been rolling out across the country.

However, another reason we hear about pensions is because of pension investment scams. It’s thought that an estimated £1.2 billion is lost to scam investments each year, according to Age UK.


The rise of the pension investment scam

Since the introduction of greater pension freedoms in April 2015, people have been able to gain access to their pension pots like never before. This has resulted in an increase in scammers targeting those with pensions, so it’s important to be on high alert.

One way scammers do this is through encouraging people to transfer their pension into a high risk or poorly managed pension schemes. These can appear to help boost your pension savings and give you greater control of where your money goes. But if you are badly advised or fall victim to a fraudulent scheme, you could experience devastating losses.

It’s important to always be on high alert for situations like this, as even the most experienced and savvy investors can fall victim to investment scams.


How can you spot an investment scam?

Although you may not initially be able to tell the difference between a genuine investment and a risky or fraudulent one there are some tell-tale signs, such as:

  • Cold Calls – You’ll be contacted out of the blue by phone, or sometimes email, with a new investment opportunity
  • Persistence – They’ll continue to call you repeatedly, or won’t let you off the phone
  • Pressure – Scammers will often try and hook you by saying it’s a ‘time-limited’ offer, or provide a discount or offer for signing up before a specific date
  • Jargon – They’ll often use an excess amount of legal jargon in order to confuse
  • Minimal Risks – Throughout the discussion they’ll repeatedly try and downplay the risks of investment, informing you on how your money will be safe even if the scheme goes wrong
  • Exclusivity – You’ll be informed that you’re the only one being offered the investment and asked to keep the opportunity to yourself
  • Large Promises – You’ll be offered big returns and perks that seem too good to be true and can’t be obtained anywhere else

Remember to always be vigilant when it comes to investments, as these people are sometimes professional scammers.

It’s highly likely that they’ll have websites and documentation that look genuine. But don’t be drawn into this, remember, if you’re not sure, don’t invest.


What to do if you’re offered one of these schemes

If someone approaches you with an investment opportunity that you don’t fully understand, or seems to good to be true, here’s what you can do:


  • Check with the FCA – Take a look at the FCA warning list, where you’ll be able to check the risks attached to the investment mentioned
  • Reject Phone Calls – Once you receive a cold call, you’re likely to continue to receive them. Therefore, it’s advisable to reject any recurring calls from numbers you don’t know or recognise
  • Consult with the Citizens Advice Consumer Service – This service will be able to provide you with information regarding your rights, and offer helpful advice in regards to complaints
  • Be Cautious – If anything mentioned previously happens, then you have a right to be suspicious, and investment opportunities should probably be avoided if they seem too good to be true


If you feel that you’ve been the victim of poorly managed investment, or been mis-sold a pension investment then get in touch with our experienced legal experts today.