Why protection from financial scams is more important than ever

In April, Marks & Spencer experienced a significant data breach that caused some customers’ details to be hacked and the stores’ online services to be suspended for several weeks. Then, just a few days later, the Co-op also experienced a similar breach.

Thankfully, Marks & Spencer and Co-op have high-level firewalls and security systems that helped ensure no financial details were stolen, but the breach was indicative of a growing threat of cyberattacks and scams more broadly.

Indeed, data published by Cifas has revealed that people in the UK lost £11.4 billion to scams in 2024, up £4 billion from the previous year.

While scams are many and varied, read on to find out more about some that pertain particularly to those who actively engage in financial planning strategies and what steps you can take to help protect against them.

5 common pension and investment scams

If you have an active investment portfolio or a significant pension you’ve built up, there are certain scams you may be especially vulnerable to.

Here are five of the most common.

1. Pension liberation scams

Pension liberation or early pension release scams usually target people below the normal minimum pension age (NMPA) – currently 55, rising to 57 in 2028. The scammer may offer to help you release cash from your pension early for a cut of the value.

However, it’s only possible to access your pension before the NMPA in exceptional circumstances, and you’re likely to face a large tax bill on top of the cut you would pay to the scammer. So, this could mean you lose most or all of your pension.

2. Pension review scams

Pension review scams are more likely to target you if you’ve already reached the NMPA.

The scammer may call you and offer a free pension review to help you get the most out of your savings. Once they’ve conducted their “review”, they may suggest you move your money into high-risk or unusual investments that will be connected to them in some way.

3. Foreign exchange scams

This type of scam begins by offering what appears to be a lucrative opportunity to trade in a foreign exchange. The fraudsters often promise high or even guaranteed returns, either through a managed account or by giving you access to an online trading platform.

At first, you may see some apparent gains, which creates the illusion that the investment is working. This early success is designed to build trust and encourage you to make larger deposits. Eventually, the account is shut down without warning, and the company disappears, making it impossible to recover your funds.

Scammers often claim to be UK-based and regulated by the Financial Conduct Authority (FCA), but these claims are usually false.

You can check if a firm is FCA regulated by checking the FCA Firm Checker online.

4. Share, bond, and boiler room scams

Boiler rooms are operations where fraudsters will cold-call you with the aim of selling you shares or bonds that are either worthless, overpriced, or fake. They will often use high-pressure sales tactics to convince you to invest quickly without making proper checks.

It’s not always limited to phone calls, and they may use ads in newspapers, magazines, or online to get you to contact them first, making the pitch seem more legitimate.

5. Restricted US share scams

In the US, companies can offer shares that don’t meet standard stock exchange listing requirements to investors outside the country. These restricted US shares aren’t necessarily scams, but they can be risky and hard to sell.

Typically, you’ll need to hold the shares for a set period, usually six months to a year, before you’re allowed to sell them back to US buyers without incurring extra costs. Even then, you’ll likely need to pay a US lawyer to have the restrictions lifted. Because of these added hurdles and costs, many investors end up losing money, even if they do eventually manage to sell.

What you can do to protect against scams and how financial planning can help

If you receive a call about an investment opportunity or someone offers to improve your pension or retirement savings, always pause and verify their identity. Check their credentials and only call them back using contact details from a trusted source, never the number they give you. Avoid sharing any personal or financial information until you’re sure who you’re speaking to and that they’re legitimate.

You should always check if a firm offering you financial services is authorised and regulated by the FCA. Using a regulated firm means you can use the Financial Ombudsman Service or the Financial Services Compensation Scheme (FSCS) if something goes wrong.

Remember, if an offer sounds too good to be true, it almost certainly is.

Moreover, before making changes to your pension or investments, speak to a Chartered financial planner. They can help you assess whether you’re ready to access your pension, make sure your withdrawals are tax-efficient and compliant, and ensure your investment choices align with your goals.

Financial planners can spot red flags earlier than most and are typically familiar with the latest financial scams. They can also help you verify firms and products and can tell you if an offer fits in with your wider strategy.

Most importantly, a financial planner can help you build a long-term plan based on your goals and risk profile, which is often the best defence against being lured into something unsuitable or dangerous.

Of course, all investments carry some level of risk, but a financial planner works to grow your wealth, while a scammer works to take it.

To speak to a financial planner, get in touch.

Email [email protected] or call us on 01625 466360.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.