Pension savers are being warned to watch out for investment scams promising too-good-to-be-true returns as criminals cash in on people’s money worries.
The Association of British Insurers (ABI) said scam attempts may increase during an economic downturn as fraudsters look to exploit people’s anxieties and fears.
People and business owners may receive emails, calls or texts from criminals impersonating claims management companies, insurers, pensions providers and other organisations to trick them into providing personal or financial information or money.
Earlier this week, the Financial Conduct Authority warned that the pension freedoms introduced in 2015, which give over-55s more flexibility over their cash, are contributing to a significant risk of harm to consumers in the long-term savings market.
The FCA said the coronavirus outbreak is exposing people to significant market volatility.
People could make unsuitable investment decisions or be at risk of fraud.
HSBC UK said its data shows over £5 million was unwittingly handed to fraudsters posing as legitimate investment providers in 2019/2020.
Since the voluntary authorised push payment (APP) scams reimbursement code was introduced in May 2019, HSBC UK customers who fell victim to investment scams had bigger sums of money taken from them than any other type of APP scam, an average of £15,481 per case.
APP scams happen when someone is tricked into making a bank transfer to a fraudster.
The bank warned investment scams include advertisements for bonds that may look genuine but are fake products.
Scammers may copy a legitimate firm’s website.
James Hewitson, head of wealth management at HSBC UK said: “We’re aware that fraudsters are using the coronavirus outbreak to take advantage of people who may be in an anxious state and facing financial difficulty.”
Pete Glancy, head of pension policy at Scottish Widows, warned: “Once you’ve handed your money over to fraudsters, there is often little chance of getting it back. They’re ready and waiting to disappear without a trace.”
He said a “big red flag to watch out for” is anyone asking you to withdraw money urgently from your pension or bank account for an investment opportunity.
Research by Ofcom has also found 46% of UK online adults have come across false or misleading information about coronavirus in recent days.
The ABI highlighted threats consumers and businesses:
– Robocalls or automated texts that may claim, for a fee, they can help recover losses by submitting a claim, for the cost of a holiday or event such as a wedding cancelled due to coronavirus.
– Pension and investment scams, which might promise higher returns than current savings.
– Cold calls about pensions. It is illegal for firms to contact you out of the blue about your pension, and you should hang up. The caller may offer to help you access your pension before age 55, or offer you a “free pensions review”.
– Phishing emails attempting to trick people into opening malicious attachments or reveal personal or financial information.
– Ghost brokers. Fraudsters may attempt to use an insurer’s branding to promote and sell fake or invalid insurance products, including products such as travel and business interruption which may claim to offer Covid-19 protection.
– False insurance cancellation. Callers will say your insurance has been cancelled and they promise to reinstate it in return for an additional fee.
The ABI said people should suspect offers that seem too good to be true and not feel under pressure.
Check credentials using a name and contact details.
Consumers should never give personal details out such as an insurance or pensions policy number or other account details and should always use the contact details on the documents provided by their insurer or pension provider.
Mark Allen, the ABI’s manager, fraud and financial crime, said: “If someone offers you a deal that looks too good to be true, then it probably is.
“If you are unsure, always check the Financial Conduct Authority’s financial services register to make sure that who you are dealing with is genuine.”
Stephen Dalton, head of intelligence and investigations at the Insurance Fraud Bureau, said: “It’s important for the public to be wary and do basic checks.”
Charlotte Jackson, head of pensions operations and consumer protection at the Money and Pensions Service, said: “Difficult as it is, the most important thing is not to panic or rush into making any decisions about your pension at the moment.”
Detective chief inspector Andy Fyfe, head of the City of London Police’s Insurance Fraud Enforcement Department (Ifed), said: “Several of Ifed’s past cases have involved fraudsters who exploited other human tragedies, such as the Grenfell Tower Fire and London Bridge terror attack, and the Manchester Arena Bombing.”
Scams should be reported to Action Fraud.