Largely thanks to a campaign led by financial advisers, the dangers of financial scams have been big news over the past few weeks.
We are delighted that the government is finally acting to ban cold calling in respect of pensions. But, with a cold call made every eight seconds, millions of people are still at risk of being caught by the scammers.
We thought therefore, it was worth reminding you of our top tips to help you avoid being scammed.
Tip #1: Never respond to a cold call
Many scams start with a cold call.
This really is very simple, never, ever, make a decision about your pension or investment following a cold call; no matter how convincing the caller may be.
If you receive a cold call, simply hang up; there’s only one person who will benefit from the call and it won’t be you.
Tip #2: Never reply to an unsolicited text or email
Scammers often use texts or emails to get in touch with potential targets.
Again, don’t engage, simply delete the text or the email and forget about it.
Tip #3: If it’s too good to be true, it probably is
Many scammers will try and tempt victims by offering high returns whilst guaranteeing your capital.
If you get offered such an investment warning bells should start to sound. The higher the return, the more risk the investment brings; there’s no such thing as a high return, guaranteed investment.
Tip #4: Look out for high pressure tactics
Scammers want you to act quickly; the longer you take to make a decision the more likely it is you will uncover their scam or change your mind.
Watch out for high pressure tactics such as putting pressure on you to sign forms, make decisions or sending documents to you by courier.
Professional advisers, acting in your best interests, will always give you time and space to consider their advice and make the right decisions, without applying pressure.
Tip #5: Watch out for offers of a free review
Not all offers of a free pension review are a scam, but many are.
An increasing number of scammers a free pension review as a way of tempting you to use their services. Obviously, to make money, the scammers need to sell you an investment.
If someone offers you a free pension review on a cold call, or via an unsolicited text or email, alarm bells should start to ring.
Listen out for other words too, which are often used by scammers, such as ‘pension liberation’, ‘loan’, ‘loophole’, ‘free pension review’ or ‘one-off investment’.
Tip #6: Remember the basic pension rules
It is impossible, unless you are unfortunate enough to suffer from a terminal illness, to access your pension pot before the age of 55.
Be wary of anyone who says otherwise, it’s a massive warning sign that a scammer may have you in their sights.
Avoid too, anyone who suggests you should take out a large lump sum from your pension and invest it with them. You’ll probably be hit with a large tax bill when you take money out and the investment opportunity could well turn out to be a scam.
Tip #7: Avoid unusual, guaranteed and overseas investments
Scammers often promote investments which they claim to offer high, guaranteed, returns. It is not possible to combine the two and all too often results in a high risk, unregulated investment, giving the investor nowhere to go when it fails.
Watch out for unusual investments into things such as storage units, wine, woodland, forestry, we’ve even seen offers of burial plots and bamboo!
Overseas property, for examples hotels and holiday resorts, are a favourite of scammers.
Again, look out for words such as ‘unique’, ‘overseas’, ‘environmentally friendly’, ‘ethical’, ‘guaranteed’, ‘FCA approved’ or ‘HMRC approved.’
Tip #8: Check the FCA register
All registered financial advisers will appear on the FCA register.
Check out the person or business offering you investments on the register, by clicking here .
If they don’t appear simply walk away and find an adviser who does.
Tip #9: Use the FCA’s tools
The FCA’s website contains some excellent tools, including one you can find by clicking here .
Using these tools, and the other information on their site, will help you to avoid the clutches of the scammers.
Tip #10: Find a reputable adviser
If you have a pension and would like to understand more about the options available to you, stay in control and find an adviser yourself.
There are several ways to do this, we would suggest using Unbiased or VouchedFor as a starting point.
Even then, it’s important to do your own research.
Draw up a short list, then check out the potential advisers on the FCA register, look them up on Google and then arrange meetings.
It’s an important decision and worth taking time and effort over; their advice affect you for many years to come.