People aged over 55 are being warned not to let investment scammers flatter them into parting with their money.
The Financial Conduct Authority (FCA) is advising consumers to be sceptical and cautious before committing to an investment.
The regulator warned that investment fraudsters will often try to flatter and coerce people into making a ‘limited time’ special deal. It also revealed that the average victim of investment scams loses more than £30,000.
Pensions offer additional scam opportunity
Pension freedoms introduced in 2015 could be seen as an additional opportunity by scammers to target this age group.
Since April 2015, the government’s pension reforms have given the over-55s the freedom to cash in their company and personal pensions.
With millions of pounds now accessible which previously weren’t, scammers may try to take advantage.
Scammers may attempt to sell you a too-good-to-be-true, ‘one-off’ investment for your pension and may even attempt to entice you with upfront cash payments.
Make sure you’re aware of the signs of a pension scam, so you don’t risk losing your retirement savings.
Spot the signs of a scam
According to a survey conducted by the FCA, less than half of people in this age group are confident they know how to spot a fraudulent investment opportunity.
Mark Steward, director of enforcement at the FCA, said: ‘Be alert to the warning signs, like being contacted out of the blue, promises of low-risk and/or guaranteed above-market returns, special deals just for you, time pressure and, very often, flattery.’
Some of the common tactics used by investment fraudsters, according to the FCA, are:
- Offering lucrative returns above the market rate and downplaying the risks of the investment.
- Using flattery to make potential victims feel good, such as praising them for being a knowledgeable investor.
- Saying that the deal is only available to the target and asking them to keep it a secret.
- Saying that other clients have invested or want in on the deal.
- Putting people under pressure to invest in a time-limited offer.
To avoid being a victim, the FCA urges people to consider getting impartial advice before investing, to check whether a firm or person is authorised, and to check its warning list of firms to avoid.
With fraud now at record levels, Which? is calling on the government and regulators to safeguard people from scams.
Scammers have become more sophisticated in their bid to part us from our cash. From email scams and copycat websites to nuisance calls and tax rebate scams, we need our wits about us.
If you’re concerned about spotting the signs of other scams, take a look at our scams advice, which includes step-by-step guides, FAQs and template letters of complaint.