Fraudsters pose as finance firms to steal your savings

Beware of scams warns the regulator, as hundreds of victims have lost almost £14m between them from their pension savings

Cold calls are a sure sign that there's a scam in operation (Getty Images)

Watch out, there are scamsters about – and they’re after your cash. For starters, the pension freedoms that launched six months ago have opened the door to unscrupulous crooks preying on consumer confusion to steal their retirement savings.

Meanwhile a new wave of fraudsters claim to be from authorised financial firms and are bombarding people with calls offering bogus savings.

The Pensions Regulator reported this week that hundreds of people lost almost £14m between them in a sophisticated sting. Those behind the suspected scam cold-called pension scheme members and offered cash incentives to have their savings transferred out of the scheme into potentially better investments.

But the victims didn’t realise the scheme’s trustees were transferring the money to their own accounts or third-party firms they owned. The regulator said funds totalling around £13.7m belonging to 242 members all but disappeared – including through the payment of exorbitant fees and commission payments.

Andrew Warwick-Thompson, executive director responsible for the regulator’s work to disrupt pension scams, said: “savers must remain vigilant against the threat of scams, which have a devastating impact on people’s lives.

“If you’re cold-called or texted by people claiming they can help you get early access to the cash in your pension or unusually high investment returns, don’t be tempted. You’re likely to lose all your money and may face a considerable tax charge”.

The problem is that many crooks disguise themselves as reputable, warned Scottish Friendly’s Calum Bennie. “Pension freedom has been welcomed but we have to do more to ensure that it is not blighted,” he said.

Some scammers claim to be from well-established financial advisers to con people out of their savings by cold-calling them with offers of Isas and savings bonds that apparently pay extremely generous rates of interest.

Mike Coady, managing director at deVere UK, said his firm has been contacted by several clients who suspect they have been targeted by scammers. “We have become aware of a group of con artists that calls our clients, usually several times in a short period, masquerading as deVere, and trying to sell wholly dubious financial products,” he warned.

He says there’s a uniform approach: in the first call they never try and sell anything, but claim to have cash Isas paying 4 or 5 per cent and corporate bonds paying 6 to 7 per cent, which are protected by the Financial Services Compensation Scheme.

But the company doesn’t handle client money. “I would urge people to be extra cautious if they receive a cold call offering financial products,” Mr Coady said.

Consumers should be extremely wary if approached out of the blue over the phone, through text message or in person door-to-door. Other warning signs are that a financial firm only has a mobile number, a website or a PO Box number as contact details.

If you have any doubts at all check that the firm you are dealing with is registered with the City Watchdog before signing anything at fca.org.uk/register. You can also check the Financial Conduct Authority’s Scamsmart warning list at fca.org.uk/scamsmart.

Meanwhile, a cynical scam using the telephone preference service is among emerging threats to consumers, according to National Trading Standards. It has warned of a growing number of cold calls claiming to be from the Telephone Preference Service and trying to extract money for registration or for useless call blocking devices.

Louise Baxter, from the NTS scams team, said: “This is a sad and cynical scam that targets people who are actively trying to protect themselves or vulnerable relatives. The TPS never cold calls and its service is always free.”