66% rise in financial fraud: The 3 scariest scams everyone should be aware of

However savvy we think we are, we should all beware of financial scams and frauds.

Recently, there has been a dramatic rise in financial fraudsters trying to trick people into parting with their hard-earned money.

In the first quarter of the 2021/2022 financial year, the Financial Ombudsman Service saw a shocking 66% rise in fraud and scam complaints. So far this year there have been 5,025 cases, compared with 3,028 cases during the same period last year. And the organisation has upheld 60% of the complaints received.

While banks and financial institutions are being encouraged to do more to resolve complaints from their customers, we all need to understand more about scams and how we can protect ourselves from falling foul of financial fraudsters.

Nausicaa Delfas from the Financial Ombudsman Service said: “It’s a real concern that we are seeing such an increase in scams. It’s vital that people take extra care with their finances, as unfortunately, fraudsters are becoming increasingly sophisticated.”

So, faced with ever-increasing sophisticated scams, what should you look out for and what steps can you take to protect yourself and your money? Read on to find out.

3 financial scams to beware of

With more than three cases of fraud being recorded every five minutes, it’s wise to know what to look out for.

There are multiple ways scammers might target your pension, savings, or money you plan to invest. These are a few of the most common scams to be aware of to protect your wealth.

1. Early pension release

Although pensions are often one of your largest assets, they are locked away until you reach a certain age. At the moment, most people can access their pension at age 55 without penalty, but this is set to increase to age 57 in 2028.

You may be tempted to boost your income now or intend to retire early, and accessing your pension can seem like an enticing proposition. Be cautious of scammers capitalising on this temptation. Watch out for scammers using phrases like “pension liberation” or “pension loan”.

It’s only possible to access your pension savings before a specific retirement age under exceptional circumstances, if you are diagnosed with a terminal illness, for example. Don’t fall for a con telling you untruths as you could easily end up with a large tax bill and could lose all your pension savings.

2. Pension reviews

Pension review scams target your retirement savings and are likely to happen when you are nearing or reach retirement age. Beware if you get an unexpected call offering you a “free pension review” to help you make the most of your retirement savings.

The scammer may tempt you to move your money by promises of “guaranteed” returns, but this will involve moving your money into high-risk or unusual investments.

While it’s a good idea to make sure your pension savings are providing you with the best returns, there is no guarantee.

All investments come with some risk, which is why it is important to weigh up your options and do some research before jumping into any investment decision.

Better still, if you want to make sure your retirement savings are invested to optimise return, talk to us first.

3. Cryptocurrency scams

Still relatively new, cryptocurrency is not currently regulated in the UK. Criminals are using the growing interest in currencies like bitcoin and ethereum to lure their victims. Fraudsters often advertise cryptocurrency investments using images of well-known people to give their offering more legitimacy.

Scam firms often manipulate software to distort prices and investment returns. They may also close online accounts and refuse to transfer funds.

How to protect your money from financial scammers

The first step in protecting yourself is to arm yourself with knowledge about how scammers and fraudsters operate. Reading this article is a good start, but sharing what you learn is important too.

A five-minute conversation could help prevent fraud

As well as being aware of potential scams that could affect you, speak to friends and family about what to look out for and help protect them, too.

Take Five offers straightforward and impartial advice to help people protect themselves from preventable financial fraud.

The Take Five anti-fraud checklist

If someone you don’t know contacts you asking for personal details, ask these questions to help you identify a fraudster and protect yourself.

1. Is the phone call unsolicited? Was it expected, or did it arrive out of the blue?
2. Are they asking you to confirm sensitive details such as your name, address, or banking details?
3. Are they looking for a fast or instant response?
4. Are they asking for money?
5. Is the caller avoiding using the actual name of your bank or utilities company?
6. Are they offering a prize, gift, or trial?
7. Are they saying they are the police investigating something? If so, don’t give away sensitive information.
8. Does an email for your bank or other company come from an odd email address?
9. Is the formatting strange or are there spelling mistakes?
10. Are you being asked to change your password even though you haven’t received a request to do so?

We’re here to provide information and lend support. We will help you assess opportunities and discuss how they might fit into your wider financial plan. As the Take Five campaign says, a five-minute chat could help you avoid being scammed.

If you’ve been approached and are worried it may be a scam, please get in touch. Email us at hello@firstwealth.co.uk or call 020 7467 2700.

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.