Consumers vulnerable to “misdirection” scam tactics over pensions savings withdrawal

This, according to the regulator, makes them vulnerable to “misdirection” tactics to con victims. It explained that just as with magic tricks where misdirection is used to divert attention while the trick is carried out, emerging scam tactics are following the same pattern. 

In order to assess how this could impact consumers, the FCA conducted a survey of more than 1,000 people aged 40 or over. It showed that 44% would take up the offer of a free pension review - which is a typical distraction tactic that scammers use. 

Additionally, 46% would also be reassured if a potential scammer got in touch out of the blue could show them third-party verification - such as a separate individual who can falsely vouch for them, while 31% would feel reassured if they had positive reviews of their service. Despite this fact, scammers are becoming skilled at producing fake websites and brochures.

Scammers will also prey on their victims’ misunderstanding of how pension savings work to secure their money, with 54% saying they did not feel confident in how to grow their pot, and 38% not feeling confident in understanding how pensions work.

As such, the FCA is calling on all consumers to be “ScamSmart” and check the information on the ScamSmart website, including the Warning List, before making any decision about their pension. 

The FCA’s director of enforcement and market oversight executive Mark Steward said: "Many of us sit in awe watching magicians make things disappear right in front of our eyes, despite us thinking we can see everything going on. 

“Once the trick ends, there are no consequences and we can enjoy the rest of our night. But that doesn’t happen with pension scams.

"The rising cost of living is affecting people at all savings levels, and pension scammers are taking advantage of this. Pension scammers are tricking victims with false promises of a better lifestyle in retirement, more money to support a better life in hard times. 

“Like the magician’s trick, thousands can disappear in seconds, but this time the consequences can be devastating ones.”