FCA reveals plans to protect consumers from coronavirus scams

The regulator set out its priorities for the next three years

The financial watchdog has committed to tackling new scams that have arisen since the beginning of the coronavirus pandemic, it announced today. 

The Financial Conduct Authority set out its priorities for the next three years, including helping the most vulnerable, keeping markets working well throughout the outbreak and making sure that financial firms give "strong and clear support" to their customers at this difficult time. 

The financial regulator says the introduction of pension freedoms in 2015, and the coronavirus pandemic, have significantly increased the risk of consumers being defrauded.

It said: “We want consumers to have access to high-quality advice and support, and be aware of how to protect themselves from scams and fraud.”

To help tackle the problem the regulator is proposing a campaign to help consumers make better-informed investment decisions.

This will build on its existing ScamSmart campaign, which highlights common tactics used by fraudsters.

Pension freedoms

Pension freedoms were designed to give people greater control over their pension pots. They allow anyone over the age of 55 to take some, or all of their pension, as a lump sum, with the first 25% paid tax free.

People who have drawn down from their pensions are prime targets for scammers looking to trick them out of their cash.

On average consumers who are scammed lose 22 years’ pensions savings, almost three times their annual earnings when working, according to the FCA.

Those with relatively small pots of money are particularly vulnerable because many feel that it is not worth paying for the advice that could end up keeping them safe.

Scammers will often make too-good-to-be-true proposals, offering high returns on pension savings for little risk. Common types of scam include overseas property developments, renewable energy bonds, storage units and biofuels.

How to protect yourself

Try not to engage in conversation with cold-callers. Always make sure you treat unexpected calls, emails and text messages with caution as they could be from scammers. Even if a person has information about you, do not treat them as genuine.

Never give out personal information, including your bank details. Think about installing call blocker technology on your phone.

Do not be pressured into making a quick decision. Fraudsters might offer you a bonus or discount if you invest before a set date or say the opportunity is only available for a short period. Legitimate financial firms will always give you time before you decide.

The FCA has a record for clone firms and also publishes alerts when it identifies one.

Before investing, check the FCA Register to see if the firm or individual you are dealing with is authorised and check the FCA Warning List of firms to avoid.