4 common pension, investment, and bank scams to look out for

The cost of living crisis has caused problems for Brits, as households struggle to cover bills in the face of rising prices.

Unfortunately, there is another issue that might damage your long-term financial security as the crisis bites: scams.

Scammers capitalise on people’s fears and worries during uncertain times. Indeed, a study from UK Finance reports that scams in the UK cost victims an eye-watering £1.3 billion in 2021.

We recently looked at how unrealistic expectations could make you susceptible to investment scams but many scam types are on the rise.

Read on to learn about some of the most common scams to look out for and the steps you can take to protect yourself.

1. Authorised push payment (APP) fraud schemes stole £583.2 million in 2021

APP fraud is rapidly becoming one of the most common scams in the UK.

The scam involves fraudsters tricking victims into making large bank transfers directly into the criminal’s accounts.

Scammers impersonate banks or other trusted organisations, such as the NHS or government institutions, claiming you have been a victim of fraud. They will prompt you to move your funds into a different bank account to protect them. Of course, this account belongs to the scammers.

According to UK Finance, APP scams accounted for losses of more than £583 million in 2021, of which, £505 million was from individual consumers (with £77 million lost from businesses).

Never transfer funds to an unverified account. Do your due diligence and ensure the requests you receive are genuine.

2. Investment scams cost investors £171 million in 2021

While impersonation scams use fear to prompt you into unthinkingly transferring your funds, investment scams present “too good to be true” opportunities to prospective victims.

For example, you might be approached with an offer to make a low-risk, high-return investment. The fake business could have a website with glowing testimonials. They may ask that you keep the opportunity secret or to act quickly as it is time-sensitive.

These fraudsters then make off with your money once your “investment” is completed.

UK Finance reports that £171.7 million was lost to investment scams in 2021.

Some common investment scams involve cryptocurrencies, energy companies or asset purchasing such as antique wines, precious gems, or land abroad.

Remember: a second opinion is vital when making investment decisions. As a starting point, speak to us to ensure you are protected from any potential scams.

3. Pension liberation scams can rob you of your retirement funds

If you’ve been smart with your money throughout your working life, you’ll probably have amassed a significant pension pot by the time you reach your mid-50s.

These funds can be tantalising, and you may feel tempted to withdraw money early. However, withdrawals taken before you turn 55 (rising to 57 in 2028) are likely to be hit with very large penalties.

A pension liberation scammer will try to convince you that they’ve discovered a loophole to avoid penalties while letting you access your retirement funds early. This may take the form of a high return investment opportunity with associated “fees”.

The truth is that you can’t access your pension early, unless in exceptional circumstances, and so these offers are typically a scam.

The Pensions Regulator reports that while some victims have lost millions from their pension pots, average losses total around £75,000.

It’s highly unlikely that the legal loophole promised exists, so always seek professional advice to determine if it’s legitimate or not.

Remember too that pension cold-calling is banned. If you receive any unsolicited calls about your pension plan hang up immediately.

4. Be wary of unsolicited phone calls, emails, and texts

There are a variety of ways scammers may reach out to you. You may be presented with a “too good to be true” opportunity or be informed that you’re owed money from a third party.

The scammers will offer to help you access these opportunities for a fee and will push you towards making an ill-advised bank transfer.

You might be approached via:

• Cold-calling, in which you receive a phone call from the scammer using either an unknown or unlisted number or a number associated with a fake website (some even use technology to make their numbers mimic trustworthy institutions).
• “Phishing” scams, which reach out to victims through emails, prompting you to click on a link to a fraudulent website that will often download a virus onto your computer. The virus will seek out personal and financial information and return it to the scammer.
• “Smishing” scams, which involve text messages that mirror legitimate businesses or government organisations. They might inform you that you have been flagged for a variety of reasons such as an unpaid tax bill, a fine or a package stuck in customs.

Follow the stop/challenge/protect approach to protect yourself against scams

The “Take Five to Stop Fraud” campaign, advises a three-step approach to avoiding scams:

• Stop: take a moment to review the opportunity before parting with any money or information.
• Challenge: investigate the opportunity for any signs of fraudulent activity. Take your time, as only criminals will try to rush or panic you into making quick financial decisions.
• Protect: immediately contact your bank and the relevant authorities if you believe you’ve been a victim of fraud.

Make sure your personal information is secure. Use secure, complex passwords and don’t share them with others. Don’t click on unverified links and always be cautious when asked to share your personal data.

“Too good to be true” opportunities are often exactly that. A safety-first approach will insulate you from potential harm.

Get in touch

Scam offers will likely seem too good to be true. A long-term financial plan aligned with your goals will help you to achieve your dream retirement without the need for undue risk, so get in touch now if you’d like to discuss this further.

Email info@lloydosullivan.co.uk or call 020 8941 9779.

Please note:

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.