Citizens Advice is demanding more action to combat a surge in marketing from companies exploiting the pension reforms, following claims that nearly 11 million consumers have received unsolicited contact about their pension since the changes came into effect.
The reforms, which were launched exactly a year ago, give consumers greater choice over how to access their pension savings by removing the effective requirement to buy a guaranteed income product, such as an annuity.
But despite repeated warnings, from the Information Commissioner’s Office, MPs, the DMA and other industry groups, Citizens Advice claims not enough is being done to protect consumers from scams.
In a new report, “Too Good to be True?”, it says that most consumers are unable to even spot the scam warning signs.
It added: “Our research reveals an alarming lack of knowledge amongst consumers. In an experiment in which research participants were shown mock advice adverts, almost nine in ten (88%) consumers selected a pension advice offer containing pension scam warning signs.”
The organisation reckons consumers are most likely to turn to informal sources to check for a scam. “With consumers struggling to identify pension scams, it is increasingly important that they can find reliable information on offers. We found that the three top sources for checking pension offers are informal, such as asking family or checking a company’s website, but our experience suggests that these are not always reliable.”
It also says that those eligible to use pension freedoms are more vulnerable: over 55s are 70% more likely than its overall client base to visit it for help with fraud and scams.
Citizens Advice is calling for a four-pronged attack on the issue, including greater awareness of scam warning signs to consumers, extending the Financial Conduct Authority ScamSmart portal to include scam warnings and more action from the ICO in monitoring emerging scams and trends.
It is says that financial advisers should avoid using lead generators who make unsolicited calls or high pressure tactics.
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