A persistent lack of awareness among consumers around spotting pension scams and where to find financial advice has raised concerns about whether consumer education campaigns are working properly.
A survey found more than a third of people over the age of 55 living in the South of England thought they would not be able to tell the difference between a pension scam and a genuine offer from a regulated company.
At the same time more than half of these people felt they had previously been contacted about a potential scam, while a third felt cold-calls about pension opportunities had increased since the government’s pension reforms came into effect in April.
Pension freedom reforms, now effective, mean savers aged 55 and over have complete access to their defined contribution pensions, subject only to a marginal tax charge on 75% of their pot.
Worryingly, almost a quarter of Southerners consulted said they did not know where to go to find regulated financial advice.
Southerners came out most ‘aware’ about pension scams in the survey, which showed the picture was bleaker in the Northern regions and the Midlands.
This puts into question the effectiveness of recent consumer awareness campaigns, such as the government’s Pension Wise campaign, and the Money Advice Service’s (MAS) ongoing efforts to financially educate consumers, said author of the research Portal Financial.
Pension Wise, funded in part by the financial services industry, launched in February with an information website and a corresponding free guidance service delivered by Citizens Advice and The Pensions Advisory Service.
The MAS, which is also funded by the industry, aims to educate consumers through its own website and outreach programmes.
The organisations offer a retirement advice directory and a signposting system, having pledged to refer those who appear to need financial advice to a regulated adviser.
But advisers have long said both, the MAS and Pension Wise services do not appear to affect their new business levels and are not worth the cost to the industry.
Portal Financial managing director Jamie Smith Thompson (pictured) said: “The result raises questions over the effectiveness of the MAS and Pension Wise awareness campaigns but it also highlights the problem that at the moment you can’t simply use the message ‘go to a regulated company and you will be protected’ for every financial product.
“MAS and Pension Wise’s job would be easier if that were the case.
“Until legislation is changed to bring all financial product sales under the regulatory umbrella it is going to be hard for the man in the street to tell a sophisticated scam from a genuine service.
“The current system of identifying and shutting down scam companies can take a very long time, which in turn means more people can be affected.”
Lack of awareness
Portal Financial asked 1,000 people over the age of 55 in four regions across the UK.
It said the findings were worrying.
|Question||Midlands and Wales||North & Scotland||Northern Ireland||South|
|Have you ever been contacted by a company that you felt could be running a financial scam?||Yes: 50%
|Are you confident that you could tell the difference between a scam and a genuine offer from a regulated company?||Yes: 59%
|Have you noticed an increase in the volume of pension-related sales calls in the last month or so?||Yes: 40%
|If you wanted accurate financial advice on the pension reforms, would you know where to go?||Yes: 73%
Source: Portal Financial