Scam warning over Regulated Advisers in “Pension Liberation” schemes
Pension liberation scams are increasingly being endorsed by FCA-regulated financial advisers. Angela Brooks, chairman of the organization, which helps victims of pension liberation scams, warns that many of these schemes use financial advisers who are regulated by the UK’s Financial Conduct Authority (FCA) to persuade people to sink their pension savings into unregulated investment products. Such scams are on the rise since the introduction of the pension freedoms in April last year.
The FCA warned earlier this month about the “inappropriate influence” that unauthorised introducers have on investment choices made by advisers, revealing that it has seen a growing number of cases where client pensions are being transferred into unregulated high risk products. The regulator found that some IFA firms had “lost control over the final outcome of advice” on pension switches and transfers, which have increased in the wake of the pension freedoms, describing many of the investments recommended as “outright scams”. But in all cases they just get on with their next scam but make it craftier, cleverer, more sophisticated and profitable (for them – not the victims).
Regulation has done little to help the victims of such fraud. When someone has been scammed and complains to the firm, the firm will either ignore the victim or confuse the victim with regulatory jargon to dismiss the complaint. The victims then contact the regulator, only to be told that the firm was not regulated to give investment advice and there is no recourse to the Financial Services Compensation Scheme (FSCS) and this is particularly likely if the firm is outside of the UK. Legitimate IFAs have been “deluging the regulators with evidence of malpractice but relatively little seems to be changing.”
Pension liberation scams
The findings come just days after the UK’s Insolvency Service revealed it had shut down five so-called pension liberation companies over the past year, after they scammed pensioners out of £128m. In one case, two companies – KJK Investments and G Loans – worked together to get investors to take out a loan from G Loans on the condition that they used their existing pension funds to buy shares in KJK. Essentially, investors were essentially borrowing from themselves. Promised a return of 6% per annum, the scam lured in 209 investors who lost a total of £11.9m. Meanwhile, the other three companies – Imperial Trustee Services, Omni Trustees and Transeuro Worldwide holdings – persuaded 500 victims to invest £116.5m in storage pods via occupational pension schemes and self-invested personal pension schemes (SIPPs).
The warning coincides with a survey by insurer Old Mutual Wealth which found that more than one in ten people over 50 have been contacted by pension liberations firms, raising concerns savers are increasingly at risk of scammers. The study questioned 1,500 Brits aged 50-75 about retirement. Around 12% of respondents said they had been contacted by pension liberators offering a “free review”, “unlocking”, or “liberation” of their pension. The majority were contacted through cold-calling, which rose from 56% in 2015 to 68% this year. According to the report, liberators were offering to divert savings “into other investments with the promise of amazing returns, which often fail to materialise”, no surprise there.
Are you under the age of 55? Have you been approached? If so, please contact me now for help before your money disappears………