The UK's Financial Conduct Authority and Ombudsman have issued fresh scam warnings as the cost-of-living crisis is exploited by fraudsters.
FCA executive director Sarah Pritchard delivered a speech at the Financial Crime Summit and compares financial con artists to Covid, a "complex and ever-evolving enemy" that requires all sections of society to act to fight it.
More than seven in ten people have been targeted by scammers in the past three months as fraudsters attempt to take advantage of the cost-of-living crisis, according to figures cited by the FCA.
The UK regulator sees a rise in scams exploiting cost of living crisis, including false access to rebates from utility companies.
There has also been a rise in complaints about investment scams to the Financial Ombudsman Service (FOS) between April and July 2022, with a large proportion involving cryptocurrency.
AJ Bell highlights how savers and investors are now being urged to beware increasingly sophisticated scamming techniques.
Tom Selby, head of retirement policy at AJ Bell, said: "It is a depressing fact that the more vulnerable people become, the more active financial fraudsters are. We saw this during the worst of the Covid pandemic, and with inflation surging we are seeing it again during the cost-of-living crisis.
"Scammers often use sophisticated techniques to swindle people out of their savings, with cryptocurrency ‘investments' offering huge potential returns increasingly used to tempt people to part with their cash.
"These investments often end up being a Ponzi Scheme, or entirely fictitious, with those who hand over their money risking losing everything.
"While people of all ages can fall victim to scammers, those who are able to access their retirement pot - potentially the biggest asset they own - will inevitably be a prime target. Huge efforts continue to be made to protect people from thieves, but ultimately the surest way to avoid becoming a scam victim is to know the tricks they use and not hand over your money in the first place."
AJ Bell further highlighted five steps to help avoid being scammed:
1. If someone contacts you out of the blue to talk about your pension, hang up!
Most people at some point will have received a phone call from someone they don't know claiming to offer an incredible investment opportunity for their savings or a ‘pension review' service. If this happens, hang up immediately. Equally, don't respond to text messages, emails or social media contact from someone you don't know claiming to hold the key to retirement nirvana. In all likelihood this will be a scammer phishing for victims, so, whatever you do, don't take the bait.
2. Don't deal with unregulated ‘advisers'
While telephone, text, email and social media remain the primary weapons of choice for the modern con artist, some continue to knock on doors; usually targeting older people they think are more likely to be vulnerable. Make sure you only deal with FCA-regulated advisers - this is particularly important as if you are sold an investment by an unregulated individual, you won't have recourse to compensation.
3. Be wary of overseas or crypto investments promising sky-high returns
Scammers often promise double-digit returns through exotic investments in far-flung locations. Promoting cryptocurrency investment ‘opportunities' has also become an increasingly popular route for fraudsters. If you're told you can get 10%+ annual returns from a teak plantation in South American or a hotel room in Spain, tread carefully and do your due diligence. Often fraudsters will advertise investments in an asset that doesn't exist or hasn't yet been built, so don't hand over your cash unless you're 100% confident you're being sold a genuine, bona fide investment.
4. Watch out for schemes offering ‘guaranteed' returns
Nothing is guaranteed when it comes to investments. If a company you've never heard of says it can deliver GUARANTEED returns of any amount, don't touch them with a barge pole.
5. Don't rush to make a decision
Don't be forced into doing something you aren't comfortable with and might regret by a pushy salesman or saleswoman desperate to boost their commission. Your pension might just be the most valuable asset you ever own, so invest it wisely. And if you are at all unsure, check the FCA's ScamSmart website (ScamSmart - Avoid investment and pension scams | FCA) or speak to a regulated financial adviser before making any decision.
