11th March 2015
The boss of the City watchdog has issued a fresh warning about the risk of pension scams as new freedoms come into force this April.
Speaking the National Association of Pension Funds investment conference in Edinburgh this afternoon, Martin Wheatley, the chief executive of the Financial Conduct Authority, said the regulator would be on the lookout for cons.
He said: “One of the most important risks is the possibility that some customers in this first tranche to benefit from the new freedoms, will be targeted by criminal enterprise. Scams and fraud, we know, tend to proliferate at the moment of maximum uncertainty.
“Or the possibility that firms target consumers, before they hit 55, with pension liberation scams, persuading them to access their money before the rules allow access. A particular risk, given that many of those approaching retirement today will – unlike their parents’ generation – be carrying debts with them.”
He said it would not be possible to protect every pensioner from making poor decisions.
“Some savers, come 55, will invariably head to Las Vegas, buy fast cars or otherwise calculate how to run down their pension pots in days and months, rather than years.
“Optimists will be inclined to believe that these numbers will be fractional. Pessimists that they may be more significant. Indeed Saga seems to have suggested that cruise bookings have already risen by some eight percent ahead of April. But the reality is that this is all simply part of the process that flows from the benefit of freedom.”
Wheatley likened the changes to a “Y2K” moment for the pensions industry and urged all professionals to be alert to the risks affecting their customers.
Tom McPhail, head of pensions research at Hargreaves Lansdown, said: “The new pension freedoms are great news for investors but they do come with risks too. After April, unscrupulous financial predators may not even have to commit fraud to get their hands on the retirement savings of the unwary.”
The adviser offered the following checklist for anyone considering tapping into their pension savings: