Despite warnings from UK Finance, the Financial Conduct Authority (FCA), and Action Fraud, scam numbers are on the rise.
FTAdviser warns that investment fraud rose by 50% last year, while MoneyAge confirms that total losses from fraud for the first half of 2022 alone totalled £609 million.
With the cost of living crisis set to cause hardship for many this Christmas, fraudsters are looking to capitalise. Pension and investment scams take many forms, from impersonation fraud to pension liberation.
The latest scams to look out for are linked to the government’s Energy Bill Support Scheme, using the £400 energy bill rebates as cover to extort funds.
Keep reading for three top tips to help you keep your money safe this winter.
1. Avoid social media “get rich quick schemes”
City of London police has urged investors to ignore “get rich quick” schemes, especially those found on social media platforms.
A huge £891 million was lost to scammers during 2021/22, up from £596 million the year before. The number of frauds reported was more than 26,000, meaning the average victim lost around £34,000.
Young professionals (those aged 20 to 39) are most susceptible, accounting for 40% of all investment fraud victims.
Influencer ads on social media are largely to blame, according to City of London police. Clicking on ads will often lead to cloned sites designed to harvest personal data.
These lessons can be learned outside of social media too. Be wary of clicking on links or even opening emails you deem suspicious. Check the email address to see if it looks genuine and compare it to addresses on the official sites of the organisation purporting to be in contact with you.
Calls, emails, and texts could claim to be from any organisation, including HMRC, your bank, the police, or the government.
Most recently, scammers have impersonated the government to harvest victims’ bank details, claiming to be paying the Energy Bill Support Scheme rebate.
Remember that these payments are largely being made automatically, and even if you do have to apply, you won’t receive unsolicited contact from the government asking for personal information.
Report any incident to Action Fraud via their website or by calling 0300 123 2040. Suspicious emails can be forwarded to report@phishing.gov.uk or use 7726 for suspicious texts.
2. Hang up on pension cold-callers
A recent report from Canada Life has found that 51% of UK adults – around 27 million people – have, or know someone who has, received a suspicious communication in the last 12 months.
Of those communications, 8% were related to pension transfers.
Pension cold-calling was banned back in 2019 so a call about your pension, received out of the blue, is an instant red flag and you should hang up immediately.
The caller will likely offer to help you access your pension funds early. This is known as “pension liberation” and could result in a massive financial loss.
The scammers might ask you to transfer your pension into a high-risk scheme for “guaranteed” returns or suggest that you can take funds before age 55 (the current minimum, rising to 57 in 2028).
If the investment opportunity exists, it is likely high risk so you could lose your money and the firms involved are unlikely to be FCA registered. Accessing your fund early is an unauthorised payment under HMRC rules with charges of up to 55%.
It is also possible that the investment never existed, in which case, you could end up transferring your whole pension fund directly to the scammers.
3. Heed the FCA’s warnings about “debt write-off” scams
In September 2022, as UK consumers struggled with the cost of living crisis, the FCA warned of a rise in scams offering to “write off debts”.
The schemes mainly target mortgages – particularly appealing to potential victims following recent rate rises – but are run by unauthorised firms.
The service involves approaching lenders for compensation but the fees charged are high and can grow higher even if the attempt to gain compensation fails.
By targeting people in financial difficulties, the fraudsters look to capitalise on the worry and stress their victims are feeling, and ultimately only add to it.
You can protect yourself by ensuring that any firm you deal with – no matter what financial service they are offering – is FCA registered.
As with investment and pension scams, proceeding with an unauthorised firm means forgoing the protection of the Financial Ombudsman Service (FOS) and Financial Services Compensation Scheme (FSCS). The FOS could help you manage a complaint against an authorised firm, while the FSCS can protect your money (up to certain limits).
Check the Financial Services Register to make sure the firm you are dealing with is authorised and that they can offer the service they claim to be providing for you.
Get in touch
With mortgage rates rising, inflation soaring, and energy bills set to rocket, scammers will look to capitalise on all our money worries this winter.
At Hartsfield, we can help you to manage your household budget and your long-term finances, ensuring you stay alert to potential frauds so that you don’t fall victim.
If you would like to discuss any aspect of your long-term financial or retirement plans as we head toward Christmas, please get in touch and find out how our team of expert planners can help.