By Dale Critchley, Policy Manager, Aviva
Legislation is promised in the autumn that will make it more difficult for scammers to persuade people to transfer their pension pots to dubious pension schemes with high risk, high charge investments. The system of amber and red flags will ensure that members receive guidance, and where there is significant risk of fraud, that the transfer is stopped. But fraud flows like water, constantly seeking to exploit the next crack in our defences.
The Aviva Fraud report reveals that those who have accessed, or have access to, their pension pot are a particular target for scammers. We can see from our own data that a significant number of scheme members access their tax-free cash from age 55 onwards. For a proportion this may be to make a purchase, or provide financial help to family members. For others it might be because they don’t understand pensions and investing, and are seeking the simplicity of a cash deposit or ISA. We could debate the wisdom of these decisions in a world of low interest rates, but people don’t always make fully informed and rational financial decisions.
Once outside of a pension scheme, the reality of low interest rates gives fraudsters the opportunity to offer the promise of a better return. This may be reflective of the economic fall-out from Coronavirus, which has led to a squeeze on personal finances.
Our Fraud Report highlights that two out of five people have received emails, texts, phone calls and other communications that mentioned coronavirus and which they suspected to be related to a financial scam. We may be wary of unsolicited texts or calls, but fraudsters are becoming increasingly sophisticated, meaning that anyone can become a victim.
One such development is the increasing use of cloned web sites, in which a seemingly legitimate website comes out as the top search result on search engines, providing the comfort of a well-known brand. The top sites on any web search are of course advertisements, but we might not realise that as we click on the link. We might also be oblivious to the fact that search engine providers aren’t obliged to ensure that those who advertise on their sites are legitimate. Half of the people surveyed in Aviva’s report thought that search engines checked on their advertisers’ credentials, but a scam site, purporting to be from a recognised financial services brand, can advertise on a search engine without any checks being made on the veracity of the claims made.
So, can anything be done to make online investing safer?
The first thing we can all do is raise awareness of the kind of scams that are out there and get the message out that online doesn’t always mean above board. The good news is that half of the population are already on their guard - they simply don’t trust online ads. But that still leaves millions of pension savers at risk.
The Aviva Fraud Report goes some way to addressing the issue, by highlighting some of the current techniques used to part us from our savings, but pension scheme providers and trustees can make a significant contribution through the inclusion of scam warnings when people access their savings, not just when they transfer to another scheme.
The Online Safety Bill also provides government with a clear opportunity to close the online advertising gap in our armour against fraudsters. The recent inclusion of user-generated fraud, such as that promoted on social media sites, within the Bill is welcome, but Aviva would like to see the inclusion of financial scams promoted by paid-for adverts too. It’s something supported by nine out of ten individuals we surveyed as part of our report.
The aim of the Online Safety Bill is to make the internet a safe place to be and to interact with others. We also want to make it harder for scammers to part people from their hard-earned savings and make the internet a safe place to invest.
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