New insight reveals the scale of financial scams at the start of Pensions Awareness Week
- Concerns over scams increases as over a third of UK adults (36%) have become worried about scams during the pandemic, vs 26% back in May
- One in ten (11%) UK adults has either fallen victim or know someone who has fallen for a scam since March
- Average financial impact for those scammed is £587, although almost one in ten has lost over £1,000
- Most common types of scam is banking related (38%), followed by pension fraud (28%)
Fears and concerns around financial scams has increased over the past three months as over a third (36%) of UK adults say they their worry levels have increased – this compares to 26% when Canada Life, the financial services firm, last ran the data in May1/2.
The data reveals the situation is getting worse as the pandemic continues, with on average six suspicious or fraudulent messages having been received by people since March, up from three suspicious contacts reported in May.
The scamming activity has led to one in 10 (11%) UK adults either knowing someone or admitting they have fallen for a scam since the start of the Covid-19 outbreak. On average, of those who have been scammed, people lost £587, although nearly one in ten has lost over £1000.
The research also reveals the most common type of scams people have fallen victim to are banking related ones, with more than one in three (38%) reporting this type. Pension related fraud is also common with over one in four (28%) of people stating this type of scam. 22% of victims cited an insurance scam as the cause, followed by romance scams at 15%. The Governments Track and Trace service has also been used as a platform to scam people with over one in ten (15%) of people reporting they were either a victim of knew someone who had fallen for this type of scam.
Being scammed or knowing someone who has during the outbreak has left many feeling foolish (52%), although over half of those polled (62%) felt the scams are so convincing they are hard to spot. This experience has an impact beyond the financial consequences; with two-thirds (68%) agreeing that it’s taken a toll on their mental health and one in two (50%) feeling like their trust in people has completely gone.
Andrew Tully, technical director at Canada Life, said:
“The scamming frenzy appears to be gathering pace as fraudsters use the cover of Covid-19 to prey on innocent victims. Falling prey to scams hits victims financially, but there are also hidden costs with people’s ability to trust others shattered and, for some, a detrimental affect on mental health. Despite the public message campaigns and the ban on cold-calling, the scammers are either simply ignoring the law or using increasingly sophisticated ways of finding convincing ways to con people. The rise of romance scams and using the Track and Trace service only serves to show we all need to be vigilant, scam aware and follow the simple rule of thumb - if it appears too good to be true, it inevitably is. Simply walk away, hang up, or delete the email or text.”
Tips to help avoid financial scams
- If you receive an offer to help you access your pension savings before age 55. It is only possible to do this in rare situations, for example if you are very ill, so always check with your pension provider before making any decisions.
- Warnings that the deal is limited and you must act now. This is a pressure tactic, and making any financial decisions should not be done under pressure.
- HMRC will never contact you by email, phone or text informing you of a tax refund, so simply delete or ignore any contact made this way – HMRC will only contact you via post.
- You are discouraged from seeking professional financial advice or talking to Pension Wise or The Pensions Advisory Service (TPAS). An adviser would be able to explain the rules and tax implications of different options and help you make the best choices for your personal circumstances, so be very suspicious if this is discouraged.
- A recommendation to take a large amount of money, or your whole pension pot, in a lump sum and invest it elsewhere. Seek professional financial advice, and be very wary of unsolicited offers of ‘amazing investment returns’
- Sign up for Action Fraud Alert, a free service provided by the National Fraud Intelligence Bureau. The service alerts about new types of crime or those which are increasing in their severity. If you sign up you will receive those alerts which are relevant to you. https://www.actionfraud.police.uk/sign-up-for-action-fraud-alert
- The Financial Conduct Authority (FCA) Register. The Register is a public record of all the regulated firms and individuals in the financial services industry, including retirement income providers and investment companies https://register.fca.org.uk/
- There can be significant tax implications if you choose to cash in your pension in one go, so check the tax position before you make any decisions. Tax calculators are available online including: https://www.canadalife.co.uk/tools/pension-tax-calculator
- Check fca.org.uk/scamsmart for known scams and use the tools to help identify a potential scam
- TPAS also has a great section on pension scams on its’ website https://www.pensionsadvisoryservice.org.uk/pension-problems/making-a-complaint/common-concerns/pension-scams
- Check with your financial adviser, TPAS or your current pension provider if you have any doubts or concerns before you act on any approaches, or call Action Fraud on 0300 123 2040 or look online at https://www.actionfraud.police.uk/
- Source: Survey conducted by Opinium between 28.8.20 and 1.9.20 among 2,000 UK adults.
- Source: Survey conducted by Opinium between 5.5.20 and 7.5.20 among 2,000 UK adults.