E7: The rising tide of financial scams - with Michelle Cracknell CBE, Lisa Markey, and Jonathan Lister Parsons

The Pension Confident Podcast

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23 June 2022 /  

faces of host and guests of this episode of pension confident podcast.

The following is a transcript of our monthly podcast, The Pension Confident Podcast. Listen to Episode seven here, watch on YouTube here or scroll on to read the conversation.

PHILIPPA: Welcome back to the Pension Confident Podcast. I’m Philippa Lamb. On the podcast this month, how the pandemic provided rich pickings for financial fraudsters.

Music starts

Last year saw a 30% hike in swindlers profits compared to the year before. Now you might think you’re too savvy to be caught out. Are you really sure you know how to spot a scam? Did you know, for example, fraud creates almost as many victims as violent crime and theft put together? In the year to March 2021, there were more than 4 million fraud offences. And how much did the swindlers walk off with? Well, more than £2.3 billion. So what can you do to protect yourself? Stay with us to find out. We’ve got three experts here today to answer that question, Michelle Cracknell CBE is the former chief executive of The Pensions Advisory Service, and an Independent Non-Executive Director at PensionBee. Hello, Michelle, thanks for coming in.

MICHELLE: Happy to be here.

PHILIPPA: Lisa Markey is Head of Security and Counter Fraud at the OBIE. Now, that is the Open Banking Implementation Entity. It’s great to have you with us, Lisa. We were talking about Open Banking and the OBIE before we started recording. Now, it’s complex, but we need to just iron out what it is. As I understand it, this is all the tech that helps banks talk to each other and makes transactions easier for consumers. Is that about right?

LISA: That’s about it. It can be quite complex. There are lots of concepts in it but actually it’s quite simple at the core of it. It’s about trust, it’s about consumers having access to their data from the banks, the banks being able to trust other banks. You know, all of those fabulous applications we have on our phones these days. A lot of them can work on Open Banking, and really Open Banking was aimed to create competition and opportunity within the financial markets and that’s what we’re doing. We’re excited to be leading the charge on that globally.

PHILIPPA: Guest number three is our in-house expert, PensionBee’s own Chief Technology Officer, Jonathan Lister Parsons, who’s going to give us his take on the fraud landscape and tell us about PensionBee’s own initiatives to combat financial scams. Hi, Jonathan.

JONATHAN: Hi, Philippa. Good to be here.

PHILIPPA: Now it is great to have you all here. Before we start, just the usual reminder that anything discussed on the podcast should not be regarded as financial advice and when investing, your capital is at risk. Last June, Citizens Advice Bureau reported that more than two thirds of British adults have been targeted by a scammer in the past six months. So I’m guessing chances are, you know, we have all sitting around the table been targeted by fraudsters at some point. Have any of you ever actually fallen victim to a financial scam?

MICHELLE: I was a victim to one of those people that hang around on the street and say, they’ve got one last offer and they’re just about to go home for the day and they’re doing this amazing discount from £150 to £75, if I just gave them their credit card details. And I did fall for that. And to this day, I’m embarrassed that I did fall for it. I did eventually unwind it but it took a lot of perseverance. But it was just that moment, he got me with a product that I was quite interested in at the right time and I was slightly time pushed and I didn’t give it enough thought.

PHILIPPA: That’s often the way, isn’t it? They grab you just at the moment when you’re jumping on a train or in a rush. And before you know, you’ve fallen for it.

MICHELLE: Exactly right. You think, “Yes, maybe they are right. Maybe this is an offer that I can’t refuse.


LISA: Oh, that’s always what they go for. So the thing that popped out to me there, that was in the street with a credit card. There’s nothing new about that. We’ve had streets and credit cards for a long time. The fraudsters just move along any avenue and that’s what we’re focusing on at Open Banking, we’re not seeing anything new. We’re seeing exactly the same thing as what you described. However, this is just another avenue, the fraudsters are going to try and find their way through it.

PHILIPPA: But you’re a security expert. Have you ever fallen victim?

LISA: I actually have not. But these things are so clever that sometimes I will see something and I will literally send it to my tech guys to unravel and tell me, “Is this one okay?”.

PHILIPPA: Yeah. Jonathan?

JONATHAN: Well, I can’t pass up the opportunity to talk to you about an experience that my brother had recently. So he crossed the Dartford Crossing, the bridge where you have to pay a small toll.


JONATHAN: And he got a text message saying, “You’ve crossed the Dartford Crossing, please pay this £4 or £6”, whatever it was. And you know, he had done that and it was to his phone. So he clicked on the link and went through the process paying no attention, you know, what the website looked like.

PHILIPPA: Yeah, well, you would, wouldn’t you? Yeah.

JONATHAN: Why would you think it was anything other than real? And then within 24 hours, he got a phone call from the real Dartford Crossing people saying, “You haven’t paid your toll. Can you pay your toll now, please?” That really amazes me because to have somebody’s telephone number and know that they’d crossed the bridge. Yeah, that’s a strange combination, you’ve really got to have done a lot of work.

Identifying scams and fraud and the impact they have

PHILIPPA: I mean, personally, I am a massive online shopper, I always was even before the pandemic. And I’m careful, because you know, we all know there are risks. But I’m wondering if I’m really careful enough, because over 4 million offences in a single year, it makes you think, doesn’t it? The numbers are eye watering. Before we can identify a scam, and work out what to do, obviously, we need to have some sense of what a financial scam might be. So, Lisa so just slightly, what sort of thing are we talking about when we talk about a financial scam?

LISA: It’s a very broad base. But at the end of the day, at some point, there is a money transfer. And, you know, I think what you experienced, Jonathan might have been a drive by. Somebody sitting close by with something scanning and I would like to know how that works. That’s a new one for me. And the fact that it is a new one for me just shows, they’re so numerous, you can’t even hear about all of them.

PHILIPPA: I mean, I think we’re all familiar with that idea of maybe being scammed by a text or an SMS, or an email. But there’s purchase scams too, aren’t there? You know, where you buy something online…

LISA: Oh when you’re actually buying? Yeah, when you’re buying something online, I think it’s not necessarily the item that you’re buying. But the methods, you know, always look for HTTPS, which is the secure version, to make sure that your data is encrypted. There are a lot of accreditation schemes out there, like Trustpilot, that sort of thing. If you see a blank sort of bare website, then that’s a cause for concern. I’m always wary. I know people use it all the time but I’m wary of eBay, and tickets; I would be very very wary of buying tickets online.

PHILIPPA: We saw that recently with the Liverpool fans at the Champions League final. 70% of the tickets presented were fake.

LISA: I would say that clicking on links, versus just writing in the web address you want to go to, make sure you are in charge. Don’t reply if somebody sends you an email, don’t expect that that’s a real email address. Give the person a call, you know?

PHILIPPA: Impersonation scams, isn’t it? They can be online or that old fashioned scam someone on your doorstep still.

LISA: It does, it absolutely still happens, and especially with vulnerable people.

PHILIPPA: Well, yeah, exactly that. I was going to ask you about that, Michelle, because I mean, I don’t want to get into victim blaming here. But are there some sorts of people who are more likely to become victims than others? Can you profile likely victims?

MICHELLE: Well, I think there’s quite a common myth that scams affect vulnerable people. And certainly, there are some terrible stories of people that are lonely, and therefore are profiled and pulled into certain scams. But in the pensions area, certainly, the experience that I’ve had is that actually, level of knowledge and financial expertise is not a barrier. In fact, in a way, because the individual is always looking to improve on the investment performance or some other angle of their pension scheme, then they are prime people to be targeted to go into some things that’s offering a better investment possibility. And in fact, just an anecdote from me is that when I was Head of the Pensions Advisory Service (now the Money and Pensions Service), I was blogging about pensions all the time and I was getting scams about three or four times a day because my social media profile was picking up that I was talking about pensions, so they were thinking, “She must have pensions, and she must be obsessed by pensions, which I am”.

PHILIPPA: Citizens Advice, they say people over the age of 55 are most likely to be targets of fraud. That seems relatively young, when you think of elderly people, but middle-aged people, and those under the age of 34 are five times more likely to fall victim to a scam. I was surprised by that.

LISA: They’re just so much more prolific out there. They’re doing everything there is, there has to be an exposure sort of as we call in security, “the attack surface,” probably a numbers game as much as anything. Plus, you know, they’ve grown up. Those people have always had smartphones. The thought process is very different. So you’ve got this little secure group of people between 35 and 55, who have like not grown up with that much technology.

PHILIPPA: They’re not digital natives.

LISA: But they’ve grown up with enough to have enough about them and to not be lonely, invulnerable as well, but really, I think that’s tech savvy. I think that’s a really interesting concept.

JONATHAN: There’s also that little cut off around 55 screams to me, pension withdrawal age. It is not the case necessarily that the middle group are much more savvy than the older group. I think it’s just that they can’t access those pension benefits.

PHILIPPA: Right? Because that’s the age at which you can release your pension into cash. So they basically have more money for fraudsters to play with, is that what you’re saying? Yeah. But I mean, as you’re saying, education doesn’t necessarily save you, does it? People with a university degree, 40% more likely to accept a free pension review from a company they did not know. I mean, and 21% more likely to accept an offer of early access to the pension. So just what you were talking about. So is that about overconfidence, you think you know a bit, and you’re not as cautious as you should be?

MICHELLE: I’m not sure whether it’s over-confidence. But I think the offer for the pension, to let me review your pensions, which is the common starting point of a lot of scams, is that people know they’ve got a pension, they know it’s important, but it’s in this black box that they don’t understand. So they don’t know whether they should pay for advice. They don’t even know where to go for advice. So the idea, I think, of somebody offering a free review, you think, “Well, that can’t do any harm, can it?” but of course, as soon as you get sucked into the process, then they will start finding little nuggets of things that are important to you and all of a sudden you find that you are buying into their scam.

PHILIPPA: Yeah, I mean, the impact can be terrible. And it’s not just money is it? I mean, the emotional impact of being scammed like that, particularly with pensions.

MICHELLE: Terrible. I mean, some of the stories that we used to hear about people that had lost their pension to scammers, it was the entire pension.

JONATHAN: The other thing that really scares me about these reviews is if you’re trusting the person who’s giving that review to you, you’re going to disclose who knows how much personal information and financial information. So that particular experience doesn’t need to directly lead to apension scam, because they’re going to find out all about your assets, they might find out about your accounts. You know, if somebody you thought was a financial adviser gave you a form and said, “Please fill in your account details”. People will.

PHILIPPA: You might do, mightn’t you?

MICHELLE: And a lot of the people that are phoning up and contacting you over the pensions review are the same people that were contacting you over PPI reviews, EasyJet plane refunds. So it’s the same people that are doing that.

PHILIPPA: That point you make about fraudsters responding to what’s going on in the world right now. I mean, I was looking at the crime survey for England and Wales, about the pandemic, in the year to March 2021 incidents of fraud shot up by nearly a quarter, 24% COVID related scams, they played a really significant part in that and they got their own name, didn’t they? The scamdemic you know, just goes to show you what a huge problem it was. And that was completely opportunistic, wasn’t it?

MICHELLE: The one thing you can say about scammers is they are very quick, very quick on the uptake, consistent, and also their customer service is unbelievable. I mean, you may spend hours on the phone trying to get through to your bank, but I promise you, your scammers will be phoning you on a regular basis.

LISA: Very true. Absolutely.

JONATHAN: You know, when everybody got locked up in March 2020, it wasn’t very long before we started getting text messages from Hermes and other couriers. You know, there’s postage to pay on your Amazon parcel. And of course, most people would just look at that and go, “Yes, I absolutely ordered some, you know, some tablets or clothes” because there was no other way to get products. And with COVID vaccines as well, you know, people sending text messages saying, “get an early vaccine”, and of course, it’s all fake, but it’s just preying on people’s insecurities.

PHILIPPA: Crypto is another one, isn’t it?

JONATHAN: Crypto is terrifying. And I say that as a technologist, crypto is terrifying. I would estimate probably 90 to 95% of everything that’s going on in crypto has at the heart of it some sort of scam. Whether that’s a pyramid scheme, or an actual criminal intent. There’s very little that I can see that’s legitimate in terms of consumer accessible activities. I mean, a lot of people are kind of gambling around buying crypto and that’s not really a scam, but it’s more of a sort of embezzlement in a way?

PHILIPPA: Yeah. I mean, would you agree with that, Lisa?

LISA: I would. I think it’s interesting too, because there’s a couple of types of crypto to my mind. There’s currencies and scams around that. But I’m also thinking of CryptoLocker, which is the encryption malware that we get in. And I think both of them are terrifying. I would absolutely agree with everything you just said. And there is a subsection of society that will always look to profit from human misery, and it’s just a fact of life.

PHILIPPA: Who are these people? I mean, they’re not necessarily in this country, obviously.

LISA: They’re very unlikely to be in this country, because there are consequences for doing this in this country. They hide behind borders where there are no consequences. The nation state concept is something we’ve been dealing with for a long time.

JONATHAN: Yeah I mean, just to pick up on the point about who these people are. I mean, I think the idea of people in a far-flung country, sort of, you know, scamming you from afar, taking your money over the internet. Yes, those are there. But they’re also sort of curious teenagers in Oxfordshire, because of the technology that we have these days, you can route your traffic through the internet, through many different countries and servers and VPNs and firewalls. And by the time that it’s sort of, you know, at the website, and the consumers, you know, entering the details on the fraudulent website, there’s no real way to track that back to the owner of the website. It’s completely anonymous. And we’ve seen, you know, big international hacking groups, you know, coming out of the West Coast of America, middle England, it’s not just nation states and far-flung groups who need to be worried about.

PHILIPPA: And this is consequence-free for them by the sound of it?

JONATHAN: Well, it is until they get arrested.

LISA: Yes. Well, that’s the thing. Because, you know, we’re talking about people that got caught here, that we know about and so there were consequences for them. But this is an industry in these countries. These people get up in the morning, they go to an office, they work, they go home. They’re not in some bunker somewhere, or wearing hoodies, you know, this is not Mr. Robot. This is a job, it is very, very big business.

JONATHAN: Also, just from the pension side, I think something which is sad, and tragic, but true is a lot of fraud comes from within the family. And that’s something that we see. You know, so people who are trying to act on an impulse to maybe access the money that they think that they are due, you know, that sort of situation where maybe a family relationship has broken down, and they have all of the personal information, you know, if they’re a legitimate customer, so I think that’s a real problem. And that’s very, very hard to put walls in front of.

PHILIPPA: A very depressing thought, isn’t it? Michelle, I mean, as we said earlier, pensions, it’s a particularly vulnerable area, because the numbers are so big. It’s a huge pot of cash for most people. Presumably that is why it’s particularly, you know, attractive to fraudsters, but are there any specific pension related scams that we should be looking out for?

MICHELLE: Yes, I think there are. It is a large pot of money. And it’s also an asset that you didn’t, in most instances, didn’t set up yourself, it was set up for you by your employer. So your level of understanding of what you’ve got, and how it works is incredibly low, in a lot of instances. And that makes it a very, very attractive target. Big pot of money, low levels of understanding. And the sorts of scams that certainly, I’ve seen in my career, have mainly been associated with investments. And I think, again, people don’t really understand that their pension is invested. And if they do know it’s invested, they don’t really know how you pick, you know, a good fund to be in and where to go. So when somebody makes an offer, to invest their pension fund in a truffle farm in France, shares in a hotel, or buying a car park, for an individual on the street that seems like a very legitimate investment, because it’s bricks and mortar. And some of the red flags in the pension scams are where they are promising - and quite often they use the word ‘guaranteeing’ investment returns of in excess of 8%, 9%, 10%.

PHILIPPA: Completely unrealistic but tempting and as you say, are kind of at particular points in your life. So pension release, pension liberation. Jonathan, you mentioned that it’s, you know, 55 you should be wary of any scheme that says, “Oh, you can have that money before 55”.

JONATHAN: Absolutely. That’s a big no-no, there’s a lot of tax to pay if you accidentally take money out.

PHILIPPA: But people don’t know this, do they? It sounds good.

MICHELLE: Absolutely. Yes. We all know that because we work in the pensions industry or the financial industry. I’ve seen less of that at the moment. And quite often now, a lot of people are saying, “take your money out at the age of 55 from this pension fund that you don’t really understand and invest it in some other vehicle”. Quite often offshore, quite often unprotected, so that you’ve got no compensation if it goes wrong, so that if the shares and the company goes bust, you get nothing back. Actually, if you went to court are not illegal. They’re just very bad for you.

PHILIPPA: It’s a terrible thought. So that’s pension liberation, pension release. We’ve talked about pension review, people phoning you up, contacting you saying, you know, “You could have a better pension than this”. Annuity scams, how do they work?

MICHELLE: The scams I’ve seen related to annuity have been playing on people’s thoughts that annuities are of poor value, and what happens if I die, that I’ll get nothing back. And so as soon as somebody mentions annuities, we used to hear this all the time at the Pensions Advisory Service. Most people say, “Well, how can I avoid having an annuity?” So people will then try and say, “Well, here’s an alternative where if you give me all your money, like, which is what happens with an annuity, will pay you an income, which is better and higher, and therefore you’re not trapped in and will also, if you did die would give your money back”. So they touch on all of the issues that people don’t like about annuities. But the one thing that they’re doing that is exactly the same as an annuity is they’re getting all of your money in one go, upfront.

What to look out for in a scam and how can we protect ourselves?

PHILIPPA: Make me feel better tell me, how do I spot these things? Are there particular red flags I should be watching out for?

JONATHAN: I mean, I don’t know if I can make you feel better. But for me, scams are one of three things. They’re either good to be true, too quick or too weird. So, returns that are too good to be true.

PHILIPPA: Unrealistic.

JONATHAN: They’ll solve all your money problems – something about it just seems wrong, there’s a lot of those sorts of scams. And then with the speed, you’ve got either the pressure to act now, or you know, this deal will be off the table or you know, like you said, the world will come crashing down. Or they don’t do enough due diligence. So they’re being really, really fast about things. They’re not bothered about whether you submit scans of your passports. They just want your account details, they want you to send them the money. And then too weird, is those esoteric investments that we were talking about. Or maybe there’s something about it, like you have to pay the funds over through a strange payment channel or move it into crypto, for example.

MICHELLE: One of the signals that we used to hear from people who phoned us at the Pensions Advisory Service was where the individuals used to come round to pick up, you know, “You don’t have to worry about photocopying your passport, you know, we’ll come and pick it up and we can take the photograph for you”. And there was just one gentleman I remember vividly who phoned us up and said, “I’m phoning from the kitchen because he’s still in the living room”.

PHILIPPA: So the checklist of things we’re thinking about is: do not be rushed or pressured into making a decision. Reject unexpected offers, cold calling, and those sorts of things. Check who you’re dealing with by using the FCA register? Tell me about that Michelle, how does that work?

MICHELLE: Yes, so the FCA have got a lot of information on their website about scams, and they’ve also got a list of all regulated firms and also regulated advisors, and also if you go into the details, you can actually see whether they are authorised to do pension transfer activity. So it can be incredibly helpful. However, and this is where people really need to be incredibly alert is that the advisor could be registered, but the person who is then giving the investment advice on top of the regulated pension product may not be and so it is definitely not a failsafe that if they are a regulated advisor that everything is okay with the proposal that they’re pushing to you.

What’s being done to help combat fraud?

PHILIPPA: Okay, shall we take a quick look at what to do if the worst happens and you do fall victim to a scam? What can you do?

MICHELLE: If you are still in the process of the transaction, stop. It is just to stop what you’re doing. Also notify, for example, if you’re transferring from one pension fund to another pension fund, notify the original pension scheme. The second thing is to phone Action Fraud, and they will ask for the details. They’ve got specific details relative to pensions, which they’ll ask you for.

PHILIPPA: And they are the national reporting organisation?

MICHELLE: They are, I’m afraid to say that definitely, in the case of pension scams, the probability, you know, they’ll give you a crime number, but the probability of you getting your money back is incredibly slow.

PHILIPPA: Lisa, what do you reckon?

LISA: Moving out further towards the rest of the financial services industry, it depends on the nature of what has happened. But with other transactions, you can get the money back sometimes as long as you do contact the organisation quickly enough, that is absolutely of the essence.

PHILIPPA: So Jonathan, pension scams, it’s obviously something PensionBee takes very seriously. Tell us about what the organisation does to stand in the way of these fraudsters, specifically about pensions.

JONATHAN: Even since the beginning of the company, we’ve had a really strong Information Security programme. So always looking at what we can do to improve our controls. We’re externally kind of audited by independent experts who look at our controls, test our systems and help us find areas where we can improve, you know, where it’s not 100% yet. We discuss it at the board level. It’s a really, really top-level area.

PHILIPPA: Raising awareness is a big one, isn’t it?

JONATHAN: Raising awareness is probably the most important thing. I mean, there’s a big – there’s a sort of, you know, saying in security that the weakest link is the human. So it’s really about awareness and helping people to make them a harder target than somebody else. I mean, I know that’s a little bit, kind of –

LISA: Actually, I think there’s a lot of truth in that. It’s the old story of outrunning a lion and I don’t have to outrun the lion, I have to outrun you. You know, on a street, the burglar will go into the house with the window open. You know, hackers are no different.

PHILIPPA: Yeah, I’ve learned a lot. It’s been really useful. Thanks so much everyone. I think we’re going to leave it there. But we could go on and on. Thank you.

JONATHAN: Thank you.

LISA: Our pleasure. Thank you so much.

Music starts

PHILIPPA: If you’ve enjoyed this podcast, please rate, review and share it and of course, subscribe to the series on your app so you never miss an episode. If you’d like to find out more about how to be scam aware, there is loads more information in the show notes. And if you’d like to get in touch with any feedback or questions, you can do that too. Email us podcast@pensionbee.com or tweet using the handle @PensionBee. And finally, please do remember that anything discussed in the podcast should not be regarded as financial advice. And as with all investments, your capital is at risk. Next month we’ll be back to unpack the world of kids’ finances. So if you’re a parent, a future parent, or even uncle, aunt or grandparent, this one’s for you. Thanks for listening.

Catch up on episode 6 and listen, watch on YouTube or read the transcript.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

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