Regulators begin joint pension scams awareness campaign

The campaign is a joint effort by regulators the Financial Conduct Authority (FCA) and The Pensions Regulator, who have warned that victims of scams lost an average of £91,000 last year. It comes ahead of a proposed ban on 'cold calls' and other unsolicited communications in relation to pensions, on which the government published draft regulations for consultation last month.

"A joint campaign has been on the cards for a while and is welcome as there is evidently enough confusion about pensions anyway without two separate regulators sending out slightly different branded messages about pension scams," said pensions expert Ben Fairhead of Pinsent Masons, the law firm behind Out-Law.com.

"Pension scams are evolving all of the time – we are seeing, for example, vast amounts being lost through investment fraud, probably after funds have left the relative security of a pension scheme. Means of legislating to stop that type of fraud are less obvious than when the funds remain within a pension scheme and where changes have either already been made or are on the horizon, such as the intended change to the right to a statutory transfer. There has also been much said lately about the limitations of a ban on cold calling," he said.

"That is why a strong and consistent publicity campaign is so important. There is ultimately no substitute for deterring an individual from making a bad investment decision in the first place," he said.

The new campaign is aimed at pension savers aged between 45 and 65, the group most at risk of pension scams. New research commissioned by the regulators found that nearly one third of savers in that age group would not know how to check if they were speaking to a legitimate pensions adviser or provider, and that 12% would trust an offer of a 'free pension review' from someone claiming to be a pensions adviser.

The campaign attempts to raise awareness of the most common scam tactics used to initiate pension fraud, which include 'cold calls' and unexpected contact about pensions via phone, post or email. Scammers often promise guaranteed high returns and downplay risks via unusual, unregulated overseas investments in hotels, forestry or green energy schemes, and put pressure on their victims to make decisions quickly through time-limited offers.

Another common tactic, used by scammers targeting those in their late 40s and early 50s, is an offer to 'unlock' money from an individual's pension. Savers are normally only able to access their pensions from the age of 55. The regulators are urging anyone who receives an offer to check whether the firm is regulated by the FCA before acting, and to consider getting impartial information and advice from the likes of the government-backed Pension Wise service or a regulated financial adviser.

"The size of individual pension pots makes pensions savings an attractive target for fraudsters," said Mark Steward, the FCA's executive director of enforcement and market oversight. "That's why we're urging anyone who is thinking about transferring their pension to check who they are dealing with, and only use firms authorised by the FCA."

"Pension scams can cause victims significant harm – both financially and mentally. If you are ever in doubt about a pension offer, visit the ScamSmart website," he said.