The Insolvency Service has urged those saving for retirement to protect their pension pots from ‘investment scammers and negligent trustees’.
Research carried out by the Service found that criminals use a range of tactics to convince savers to part with their funds, including persuading individuals to access their pension and invest in unregulated schemes.
Pension scam victims lost an average of £91,000 to criminals in 2018, Financial Conduct Authority (FCA) research recently revealed. Criminals often use cold-calls and offers of free pension reviews to convince their victims to comply.
The Insolvency Service is urging savers to be wary of calls that come out of the blue; seek financial advice before altering their pension arrangements or making investments; and not be pressured into making decisions about their pension.
‘If you are approached to make an investment from your pension, always do your homework and seek independent advice, if necessary, to help you make an informed decision,’ said Consumer Minister Kelly Tolhurst.
‘The government continues to work closely with the Insolvency Service who are working to clamp down on rogue companies targeting vulnerable people.’
From 9 January 2019, the government’s new ban on pensions cold-calling takes effect.
Making unsolicited calls in regard to pensions is now illegal, and any business found to be breaking the law will face fines of up to £500,000.
Data published by the Money Advice Service recently revealed that as many as eight scam calls are made every second in the UK, totalling 250 million unwelcome calls per year.
Meanwhile, research conducted by the Financial Conduct Authority (FCA) suggested that pension scammers stole an average of £91,000 per victim in 2018.
Commenting on the ban, John Glen, Economic Secretary to the Treasury, said: ‘Pension scammers are the lowest of the low. They rob savers of their hard-earned retirement and devastate lives. We know that cold-calling is the pension scammers’ main tactic, which is why we’ve made them illegal.
‘If you receive an unwanted call from an unknown caller about your pension, get as much information you can and report it to the Information Commissioner’s Office (ICO).’
The ICO website can be accessed here.
The Financial Conduct Authority (FCA) has confirmed plans to extend the Financial Ombudsman Service to a greater number of small and medium-sized enterprises (SMEs).
Under the plans, SMEs with an annual turnover below £6.5 million and those with fewer than 50 employees will be able to direct their unresolved complaints to the Financial Ombudsman Service.
The FCA calculates that, as a result of the changes, around 210,000 additional SMEs will be eligible to use the service.
It has published ‘near-final’ rules on the matter, allowing the Financial Ombudsman Service to begin to prepare for the changes. Final rules will be published ‘later this year’.
Commenting on the news, Andrew Bailey, Chief Executive of the FCA, said: ‘We recognise it is vitally important for SMEs to have a mechanism to resolve disputes, and we are clear the Financial Ombudsman Service is the right route for this.
‘The changes we are making are as far as we think we should go within our powers, but they will provide access to the Ombudsman Service for a significant number of smaller businesses.’
The Confederation of British Industry (CBI) has proposed an overhaul of the tax and regulatory regime for the financial services sector so that the industry can effectively deal with the ‘challenges and opportunities presented by a rapidly changing technological landscape’.
In a new report, the CBI stated that the financial services sector is ‘grappling’ with the challenges of technological change, as well as dealing with ‘shifting tax and regulatory expectations’.
The business group argued that the financial services sector requires regulations that are ‘fit-for-purpose in a new technological age’.
Some of the proposals put forward by the CBI include creating a new Treasury Select Committee sub-committee for financial services, in order to ‘scrutinise regulations and taxes’; strengthening engagement with the Financial Stability Board; and establishing a cross-sector financial services technology ‘hub’, supported by both the Treasury and the Financial Conduct Authority (FCA), to share best practice, knowledge and the latest technologies.
Commenting on the report, the CBI’s Head of Financial Services, Flora Hamilton, said: ‘The challenges and opportunities presented by the rapid pace and tremendous scale of technological change come in equal measures for financial services firms. To fully embrace this change, firms are clear that they need the right regulatory and tax framework in which to operate, so they can innovate and grow.’
Following a joint investigation by the Competition and Markets Authority (CMA) and the Financial Conduct Authority (FCA), banks will now be required to publish their customers’ satisfaction scores on their websites, apps and in their branches.
The new requirement aims to improve competition in the banking sector, and provide consumers with better information in regard to the services that banks offer.
Under the new rules, banks will also be required to publish details of available services and helplines, alongsCn on the ‘number of major operational and security incidents they have experienced’, and provide updates on this matter on their websites.
The CMA believes that by having this information to hand, consumers and small businesses will be able to gain better knowledge of the services provided by their bank, and whether their chosen bank fulfils their requirements.
UK banks and building societies with more than 150,000 personal current accounts (PCAs) or 20,000 business current accounts (BCAs) will be required to publish information on the quality of their services every six months. Banking institutions in Northern Ireland with more than 20,000 PCAs or 15,000 BCAs will also be subject to the new regulations.
Commenting on the matter, Adam Land, Senior Director at the CMA, said: ‘For the first time, people will now be able to easily compare banks on the quality of the service they provide, and so judge if they’re getting the most for their money or could do better elsewhere.’
A survey conducted by the Financial Conduct Authority (FCA) has revealed that more than a fifth of individuals who were contacted in regard to a fraudulent investment failed to report it.
The FCA surveyed a group of over-55s, and found that only 63% of individuals would report an investment scam to the authorities.
49% of those surveyed stated that they would not know who to report a scam to.
The FCA is encouraging the public to get in touch if they have been contacted by a firm offering fraudulent investments. The Authority keeps a list of potentially fraudulent firms that operate without authorisation: this can be found here.
Addressing the issue, Mark Steward, Director of Enforcement at the FCA, said: ‘It’s clear to see that by reporting suspicious investment schemes to the FCA, people are having a direct impact in helping to stop fraudsters exploiting others. But there is still more we can all do and we need the public’s help.
‘We are encouraging people to speak out on behalf of their family or local community, just like they would report a crime in their local area.’
Investment scams can be reported to the FCA using its ScamSmart website.
Individuals withdrawing money from their pension savings may lose up to 10% of their funds, a Citizens Advice survey has suggested.
The survey revealed that those using pension freedoms may have had their savings significantly reduced as a result of providers’ charges.
The data suggested that individuals with smaller funds have been paying proportionately larger fees: those with pension pots of £20,000 or less have paid an average of £1,966 in charges.
Recently, the Financial Conduct Authority (FCA) proposed a 1% cap on exit fees for current pension schemes. The FCA had previously warned that an estimated 670,000 consumers already face high fees.
However, Citizens Advice has stated that this cap is too high and is instead proposing the introduction of a standard £50 charge to cover providers’ administration costs.
Gillian Guy, chief executive of Citizens Advice, said: ‘The Government and industry needs to work together to make it easier for consumers to compare drawdown products and choose the one which best meets their needs.
‘The threat of excessive charges can also put people off making the right pension choices for them. A standard £50 exit fee across all types of pensions will mean consumers can make the most of the pension freedoms.’