The Work and Pensions Committee is right to be alarmed over online pension scams

Pensions have always been catnip to shiny-suited thieves. 

They tend to contain large pots of money, certainly relative to other kinds of savings, so the fees from just moving them around can be considerable (and can lead to very bad outcomes). 

But then along came “pension freedom”, which liberated people from having to buy poor-value annuities or complicated income-drawdown products, and handed them control of their savings upon retirement. The downside? It served as a shot in the arm to a vast criminal industry. 

The pandemic has exacerbated the situation, greatly assisting scam artists intent on parting pensioners from their funds. Their technological sophistication has grown at a disturbingly rapid pace. 

Evidence of this prompted parliament’s Work and Pensions Committee to sound the alarm – and with good reason. An estimated £10bn has been lost by 40,000 people to pension scams since 2015. Just imagine what that figure might look like in five years’ time. It ought to produce a good shudder. 

In a report published over the weekend, the committee called for global tech firms to be held to account for hosting pension-scam adverts, calling for legislation to stop them profiting from a “multibillion-pound scam industry” whose size has been “substantially underestimated”. 

The thing is, this doesn’t just apply to pensions. Whenever I turn to YouTube, for CNN or what have you, I’m subjected to a barrage of financial ads. 

It’s perhaps because I visit a lot of financial websites through the course of my work, a fact that the cookies on my browser will make clear to whatever site I visit next (ain’t the internet grand?).

But it’s entirely possible that everyone sees them because everyone’s a potential punter. Or perhaps I should say, everyone’s a potential mark. 

Jump in! Buy Amazon. Buy Bitcoin. Trade! Make pots of cash in the blink of an eye. Be like the lucky few who bought Amazon early on and retired to dream homes in favourable climates on the proceeds.

The risk warnings, which ought to make it clear that past performance is no guide to the future, and that you can just as easily lose money as you can make it? If they’re there they’re hard to find. 

Just last week, the Financial Conduct Authority (FCA) voiced concerns over “a new, younger, more diverse group of consumers getting involved in higher-risk investments, potentially prompted in part by the accessibility offered by new investment apps”. 

It found evidence that these higher-risk products “may not always be suitable for these consumers’ needs”. No kidding. Nearly two-thirds (59 per cent) of investors with less than three years’ experience claimed that a significant investment loss would have a fundamental impact on their current or future lifestyle. These are not people who should be investing in the markets. But the ads won’t say that.

At the end of last month, the managing director of Google UK & Ireland, Ronan Harris, wrote a letter to the watchdog’s Chairman and its CEO about the work the tech giant has have been doing to tackle scam advertisements on its platform.

The committee professed itself less than impressed with the company’s efforts.  “Tech firms such as Google are accepting payment to advertise scams, and then further payments from regulators to publish warnings,” it said, describing the practice as “immoral”.

Members urged the government to “rethink its decision to exclude financial harms from the forthcoming Online Safety Bill” and to use it to “legislate against online investment fraud”.

“In the same way as traditional media, online publishers should be required to ensure financial promotions are authorised,” the report said.

The committee is on the right track here and ministers should heed its call. 

A great deal of attention has been focused on the spread of political and pandemic-related misinformation over social media – and with good reason, given the violence that ensued in the US as a result of the former, and the potentially dire consequences for people’s health and the economy from the latter. 

Rather less has been paid to its appropriation by criminals, scam artists, and chancers. There is a potential time-bomb ticking here, one that threatens to blow up in the faces of a lot of innocent people. 

The committee should keep the pressure up. The FCA must do the same. They should also be aware that this is an issue that potentially extends beyond what we would normally consider scam artists, and into firms with a tad more legitimacy.

To my mind, too many are skirting the line if not actually crossing it.