When I was a child, robbers were people who broke into buildings or held up trains: real people who took solid objects from their rightful owners. Today’s bad guys are much less visible – and their targets are different too. But the thief of today is still ultimately after your money, so it’s important to be vigilant with every aspect of your financial affairs.
The NHS and many other organisations across the world recently fell foul of the WannaCry ransomware attack, demanding money from their victims to unlock their data. But as individuals we are perhaps more likely to be targets of fraud and scams that allow the criminals to steal from our accounts, purloin our identities or charge us rip-off fees for dodgy financial transactions.
Recent figures have revealed that £8.6 million was lost in pension scams in March 2017. This is an enormous number, but the real tragedy is about the people whose lifetime savings have disappeared into the ether.
There are a number of different flavours of pension scam:
1. Pension liberation schemes: these are when the scammer tells you that you can transfer your pension fund to another type of investment scheme (often overseas) that will – supposedly – bring you amazing returns and/or will allow you to access your pension before you reach the minimum retirement age. Sadly, when your money is transferred it may disappear entirely, be hit with huge ongoing management charges and you will end up paying huge tax bills because the money has been taken out of its tax-protected pension framework.
2. Get rich quick schemes: fraudsters can be very convincing and their spiel will be all about how you will be making huge returns on your money. They’ll tell you they’re approved by businesses whose names you’ll know and trust – they may use names and logos that look convincing but all of this is without substance. The deal will usually be “only available right now” so you have to sign up straightaway in order to benefit from the terms on offer.
3. Tax avoidance: the idea of paying less tax is always attractive but beware! The scammer may tell you that the new investment route will give you tax-free returns but the truth is that you could be hit by a huge tax charge if you withdraw large sums from your pension to reinvest elsewhere.
Remember: if it sounds too good to be true, it usually is
Our advice is to mistrust anything that suggests you can circumvent rules and regulations, anything that promises huge returns and anything where you are put under pressure to sign up quickly.
But that doesn’t mean that you should never consider taking action over your pension.
Pension planning is important and there may be good reasons to move your pension savings around, on occasion. But it is absolutely critical that you get good regulated advice before jeopardising your future security.
Keeping Financial Information Private
We see countless stories of people who have revealed important financial information over the phone, text or email, believing themselves to be in touch with banks, the taxman or other financial institutions.
Fake communications from HM Revenue & Customs are a particular case in point. If you’ve received an email from an email address that looks real enough, using all the right words and logos, suggesting that you’re due a tax refund, it will be a scam. They will be after your bank details. You can see examples of the sort of communications that are being used on the HMRC website.
Watch out too for calls or emails that claim to be from the FCA. Scammers pretending to represent the FCA will tell you that you owe them money and will ask for your bank details so you can pay up…
The basic rule is that no financial institution will ever ask you to reveal personal or financial information over the phone, text or email. Don’t get caught out: if you suspect it’s a scam, hang up immediately.
Being Safe Online
The internet has widened our world, but it’s also given the bad guys new ways to attack us. Good IT security is critical. Here are some basic tips:
Keep your IT up to date and protected: make sure that all the updates and patches are uploaded, so that vulnerabilities are corrected as soon as possible. The WannaCry attack was aimed at systems that used old unpatched operating systems. Have good anti-virus cover and keep it up to date.
Use good passwords: According to password manager KeeperSecurity, more than 50% of people use the top 25 most common passwords. If yours made the list, I’d suggest changing it straight away:
Good passwords should ideally include a mix of upper and lower case letters, numbers and special characters such as *, ( or !. Don’t use words linked to you and your life – your dog’s name or your maiden name, for example. Anyone viewing your Facebook profile may well be able to spot these as possible passwords. Use different passwords for different websites too – if not, the thief only has to break into one place to steal every aspect of your online ID.
It’s a Dangerous World
In the same way that you would be careful with your purse or wallet when out and about in busy places, you need to be aware of all the risks around you and secure your financial arrangements from attack.
Red Riding Hood’s big bad wolf disguised itself as her granny: our big bad cyber-wolves are working on a global scale, but they use similar tactics. Be careful out there…
This blog and any responses to comments should not be regarded as financial advice.