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Government to ban financial cold-calling as 1 in 15 fall victim to devastating scams

The government has set out a new Fraud Strategy in a bid to stem the rise in the amount lost to scams. Among the measures it will implement is a ban on cold-calls related to financial products. While it could help protect you, you must remain vigilant too.

According to government figures, fraud is now the most common crime in the UK, with 1 in 15 people falling victim. Each year, victims lose almost £7 billion. Scams can have a devastating effect not only on your long-term finances but your wellbeing too.

The new measures aim to close the routes that scammers use to target victims.

Among the steps will be a ban on cold-calling on all financial products. It means if you receive a call in the future out of the blue about financial products, from insurance to investment schemes, it could signal a scam.

The government will also work with regulator Ofcom to use new technology to clamp down on number “spoofing”. Fraudsters using number spoofing can make it appear as though they are contacting you from a legitimate firm or organisation you’d feel comfortable handing personal details to, such as your bank.

The government’s strategy could create better support for victims and a chance to recover losses as well.

Home secretary Suella Braverman will host a global fraud summit to improve international collaboration in tackling fraud. Around 70% of fraud in the UK starts overseas or has an international link. So, closer ties with other countries could reduce fraud and provide better outcomes for victims.

There is often no way to recover the money lost to scams. One important incoming change means banks can delay processing payments for longer if they believe they are suspicious. It could mean victims have a greater chance of recovering some or all their lost assets.

The government banned pension cold-calling in 2019 but people are still getting scammed

While the government’s steps to tackle fraud are welcome, it doesn’t mean you should be any less alert for warning signs.

Pension cold-calling was banned in 2019. Yet, many people are still losing their retirement savings.

A House of Commons report suggests pensions are still an attractive target for fraudsters. In the first three months of 2021, victims lost £1.8 million. The average amount fraudsters took from pensions was £75,000.

A report in PensionsAge suggests 1 in 4 savers could be at risk of pension scams. When researchers carried out an analysis of pension scam assessments, a quarter of cases had red flags. While this doesn’t automatically mean they are a scam, it does mean further investigation is needed.

The research found:

  • 17% of savers were told they could achieve higher investment returns
  • 15% of people were pushed to make a quick decision
  • 9% of savers were told there were loopholes they could use to access higher levels of tax-free cash.

Falling victim to any financial scam could have a huge effect on your plans. So, while a ban on cold-calling is a positive step, it’s essential you can recognise the red flags too.

4 red flags that could signal a scam

1. You’re contacted out of the blue

The cold-calling ban means you can confidently reject contact that comes out of the blue. Be cautious of all communications, from emails to social media messages, that aren’t from an individual or firm you’ve previously contacted or given permission to get in touch.

2. You are placed under pressure to make a quick decision

Financial decisions can have long-term consequences, and you should take the time to fully understand what they mean for you. If someone is placing you under pressure to make a snap decision, such as placing a time limit on the offer or contacting you repeatedly, take a step back and ask why they’re so eager.

Genuine professionals you want to work with will understand why you want to think through your options.

3. You are promised guaranteed or high returns

Everyone would love to receive guaranteed returns when they invest, but all investments carry some risk. And high potential returns usually mean taking a higher amount of risk, which may not be suitable for you.

Remember, if it sounds too good to be true, it probably is.

4. You are offered unusual or complex investments

Fraudsters may use complicated or unusual investment opportunities to confuse victims. If something seems unusual or the details provided are vague, alarm bells should start ringing. Make sure you fully understand any investment opportunity, including what you’re investing in and the risks, before you proceed.

3 practical steps to take if you believe fraudsters have targeted you

If you believe criminals have targeted you, acting quickly is crucial. These three practical steps could help put your mind at ease.

  1. Check the Financial Conduct Authority (FCA) register: If you’re not sure if you’re speaking to a legitimate person or firm, the FCA register may be useful. It contains the details of regulated firms and individuals, including the areas they can offer advice about. Make sure the information is the same as those you already have. If in doubt, get in touch via the contact details that are on the register to confirm them.
  2. Report the scam to Action Fraud: Action Fraud is the national reporting centre for fraud. If you’ve been scammed, report the crime as soon as possible. The quicker you act, the more likely you are to be able to recover lost assets.
  3. Get in touch with us: You can also contact us if you’re unsure about an opportunity you have, such as transferring your pension or investing in a new scheme. We can help assess the information to identify red flags and offer guidance about whether it could be right for you.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance.

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