Pensions and investments scammers are using online advertising to bombard people on an industrial scale, a committee of MPs has heard.
Mark Steward, executive director of enforcement and market oversight at the Financial Conduct Authority (FCA) told the Work and Pensions Committee that criminals no longer need to produce glossy brochures or set up fake offices as online adverts can be created “very easily”.
He said cash-strapped households spending more time browsing the internet during lockdown may be more vulnerable to fraud.
Mr Steward added that while campaigning to alert consumers has been successful, resources are an issue and further action is needed.
He highlighted an increase in online advertising “of what look like genuine opportunities but in fact are fraudulent or scam-like”.
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Mr Steward told the committee: “That has really sped up in the last 12 months, perhaps coinciding with people spending more time at home because of the current situation we’re in, spending more time at home, spending more time online as well.”
He added: “It’s very easy for a scammer who in the old days might have to set up quite a sophisticated outfit of glossy brochures, office fronts, the appearance of a legitimate business.
“Now all they need is online advertisements, which can be created very easily.
“The identifying details, names, addresses that might appear on the advertisements are not checked, so invariably they’re false.
“The scammer has anonymity in that process.”
Mr Steward said scammers can also “industrialise this process” and run multiple advertisements with various offers on a daily basis.
He added: “This has increased the temptation and increased the opportunity.”
Earlier in the hearing, he said: “Covid and lockdown (have) placed people under more financial pressure.
“Household finances are stretched and so the temptations to use savings or to be tempted by offers of ‘free pension reviews’ for example, which we’ve warned about, are very real.
“Of course a ‘free pension review’ is hardly free. It is the first step on a process that will lead someone to investing in something that is too good to be true.”
The committee heard more than £30 million has been reported as having been lost by pension savers to scams over the past three years, although the true total is likely to be higher.
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Nicola Parish, executive director of frontline regulation at the Pensions Regulator, said that before the pension freedoms – which give over-55s more flexibility to take their savings out of their pension pots – were introduced, scammers tended to set up sham pension schemes for people to move their money to.
But she said: “That’s not necessary now. Now, because of the pension freedoms it is possible to release some of your pension pot and so we’re seeing this emergence of vehicles being used for investment fraud.”
Ms Parish said members of the pensions industry should be reporting in their suspicions about scams.
Mr Steward added: “There needs to be a lot of investment… in consumer information to enable the worst choices, which we’re talking about, to be avoided by consumers and I think the campaigns that we’ve run through Project Bloom (an anti-pension scams taskforce) and the ScamSmart website that the FCA runs, together with the information that we have has been very effective.
“But I think it’s always been limited by the amount of money that we’ve actually had to spend on it. It needs much broader saturating coverage and that is what happened in Australia, it’s worth looking at.
“I think the success of these campaigns has been good, but I think we need to go further. There’s a real question of resource and money here.”
Graeme Biggar, director general, National Economic Crime Centre told the committee: “What we’re looking to do next is to move onto fake comparison websites, which is this new gateway into investment frauds, to spot those and take them down at source.”