The Insolvency Service has warned consumers to be wary of pension scams after the average scam victim lost £91,000 in 2018.
The Insolvency Service
The Government agency announced that in the past three years, it had applied to the courts to wind down 24 companies. Between the companies, there were 3,750 victims with a total pension value of £202m.
Following the company wind downs, eight directors received a ban from running a company for a total of 57 years.
Many of these companies would initially contact victims by cold call. They would gain the trust of the victim before offering a free pension review. A review does not take place and in many cases is simply a way to gain access to the victim’s financial information.
The victim is then informed that their savings are inadequate. They then offer a lifeline of a promising investment opportunity. The fund guarantees high returns for very little risk.
The victim transfers their life savings into the new fund, however, they later discover that the scheme was high risk and unregulated. In some cases, the fund never existed and the victim has essentially given their retirement fund away.
Cold calling ban
Recently, the Financial Conduct Authority (FCA) introduced a cold-calling ban on pensions. UK based companies will no longer be able to contact consumers and offer pension reviews or services. If they do, they risk fines of up to £500,000.
Investigations into cold calling by The Insolvency Service resulted in Fast Pensions and five other firms being wound up by the courts last year. You can learn more about Fast Pensions here.
However, we believe that the cold calling ban is not a solution to preventing mis-selling. Firms can easily get around the ban by moving operations abroad. You can read more on what we think of the cold calling ban here.
Did you transfer your pension following advice from a free pension review? You may have fallen victim to mis-selling. Get in touch to speak to our experts.