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Tops Tips to Avoid Pension Transfer Scamming

The Pensions Regulator (TPR) has recently acknowledged that pension scammers are being caught out and hindered by action from the government, regulators, the Work and Pensions Committee, and the wider industry, but added that vigilance is still needed.

On 22 May, speaking at the Association of Member-Directed Pension Schemes' conference, TPR's Anthony Raymond said that the plan to ban cold-calling is a welcome step-forward in protecting consumers, and that a recent High Court ruling, which saw four scammers ordered to repay £13.7million they had swindled from 245 victims, sent a clear message to fraudsters.

However, while this court action to regain funds for scam victims is brilliant news, the recommendations for pension savers are clear: stay aware of fraudulent activity and seek independent, regulated pensions advice before signing anything.

Blacktower's top tips for scuppering the scammers

Be wary of free deals – There will be a fee or charge for regulated pension transfers and the associated expert advice, so any pension adviser who says a pension transfer will be "free" is likely to be offering a non-compliant service which could see your funds damaged over the long term and will leave you without any means of redress through the Financial Ombudsman Service.

Avoid cold callers – While a ban on cold calling could be in place very soon, any unsolicited contact from a so-called pension adviser is likely to be dubious. The best thing to do with cold callers offering pension advice is to hang up immediately!

Try to contact the firm – If you have been contacted by a pensions adviser and you are thinking of taking their advice, make sure you try to contact the firm independently. Many scammers have very convincing websites, but if there is no full postal address (not a PO Box), and no landline telephone number, you could be dealing with a fraudster.

Don't be pressured – If you are told there is a time-limit to signing up for a pension transfer or the pension adviser is only in your area for a certain time, it could well be a scam. A regulated financial adviser will give you time to think about your options and, under the Financial Conduct Authority (FCA) conduct of business (COB) guidelines, you should have 30 days in which to cancel a pension transfer contract if you change your mind.

Be wary of "tax loopholes" – A firm that tells you about "extra" tax savings as part of their pension transfer scheme could be operating fraudulently. Ask for clarification and get any seemingly "too good to be true" tax claims checked out independently.

Understand the risks – If a pensions adviser promises high returns AND low risk, you should be wary. A regulated firm is obliged under the FCA COB guidelines to provide retirement risk warnings to the client in relation to their decision to access their pension savings and to identify whether there are any individual risk factors present for the client.

Don't be fooled by the name – If a pension adviser contacts you and claims to be from a government-backed scheme such as Pension Wise or the Money Advice Service, you should put the phone down. Regulated and official organisations will never cold call or send unsolicited mail.

Choose an FCA regulated firm – You can check the FCA register to see if the company offering pensions advice is regulated, and there is an FCA warning list which provides details of unauthorised firms and individuals. If the firm or adviser you deal with is not authorised by the FCA you will not be covered by the Financial Ombudsman Service or Financial Services Compensation scheme should things go wrong.

Lastly, if you think you've been targeted or you have signed something and you are now concerned, you should contact your pension provider as soon as possible as they may be able to halt the transfer.

Blacktower Financial Management Ltd is regulated by the Financial Conduct Authority in the UK, Blacktower Financial Management (International) Ltd in the Grand Cayman is regulated by the Cayman Islands Monetary Authority and Blacktower Financial Management (International) Ltd is licensed in Gibraltar by the Financial Services Commission.

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