FCA warns on unauthorised FAs touting pension advice

Published:  21 May at 6 PM
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The British financial watchdog has issued a warning on cold-calling FAs offering pensions advice.

Although the drastic changes to pension law in March’s UK budget are recognised as having dealt with the problems surrounding compulsory annuity purchase, they’ve left the door wide open for scams. According to the UK’s Financial Conduct Agency, unregistered advisors are already cold-calling investors and offering retirement guidance.

Some such companies are even claiming that they represent the government and are acting to ensure all those about to cash in their pension pots get the best investment deals. The FCA has evidence that unregistered companies are not only calling, they are texting as well, leaving open the question as to how private phone numbers are being sourced.

The cold-callers are offering free pension reviews, and touting better returns than can be had elsewhere in order to encourage their victims to move their pensions. Products being offered are small, self-administered schemes or self-invested pensions.

However, victims’ pension pots will be diverted to unregulated investment sectors known in the trade to fail, such as overseas property developments being sold off plan, storage units or forestry schemes. Tracey McDermott, the FCA’s director of enforcement and financial crime, suggests that consumers should simply cut off any cold-caller offering a free pension review.

For expats, it’s a slightly different issue, as it’s not just cold-callers who push unregulated investments, it’s often so-called FAs working illegally within expat communities worldwide. Litigation funds, a favourite with unethical advisors, have been collapsing regularly for several years, and the LM Ponzi scheme is now a benchmark for fraudulent behaviour amongst some expat FAs.

Expats should also take care if approached by an investment firm in their host country claiming to have contact with a UK firm offering pension advice. Not getting involved is the best way to make sure you’re not scammed and, if a UK company is involved, checking the FCA’s website for its registration is essential.
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