When John transferred the money he thought he’d got a great deal. In the current market, deciding what to do with his pension lump sum hadn’t been easy but this investment opportunity had come just at the right time and the promised returns looked great. It was only when his building society contacted him that he had second thoughts…
This example, drawn from a real case study, could be anyone you know who has a private pension. Fraudulent activity relating to pensions has doubled in the last two years and there is much more that financial institutions could do to help reduce it.
In this case, John was contacted by his building society. They spotted he was making an unusual transaction and recognised it was similar to other patterns of fraudulent activity of which they were aware. They told John about similar scams currently operating and asked if he would like to delay the transfer of funds whilst he spoke to a friend or family member about it. After speaking to a friend, John was on the phone first thing the next morning to say that he would like the transaction stopped – he had realised the deal he was promised was too good to be true and didn’t want to risk his money.
John’s reaction may seem unusual; surely a bit of time wouldn’t really change a customer’s mind? But Financial Ombudsman Service data shows that 20% of customers realise within two hours that they have been scammed and 75% realise and raise the alarm within a day. Extra time to think can bring clarity. Scammers deliberately put people under time pressure in order to try and get them to act in an out of character way.
Cifas is already active in helping its members to build flood defences against fraud as well as handing out sandbags after the flood. Our challenge to the wider banking industry now is to consider introducing a greater degree of assurance into transaction processes that might just help John to protect his life savings. Our challenge to Cifas members would be to work with Age UK to share knowledge about what turns people into victims, build referral systems to support people who have experienced fraud and support people to take the preventive steps that work.
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