Pension scammers are offering consumers free pension reviews via social media to try and circumvent the cold calling ban, according to the Financial Conduct Authority (FCA).

According to the regulator’s Perimeter Report 2019/20, it has seen evidence of this in relation to pension transfer scams, but it can be “difficult to establish” what is being covered in the reviews.

However, it said there were indications that they can be “instrumental” in savers deciding to transfer out of their existing pensions, potentially losing major benefits in the process and/or exposing themselves to high-risk or illiquid investments.

The FCA noted that these financial harms can also arise where introducers encourage consumers to take out high-risk or illiquid investments in a self-invested personal pension wrapper.

Furthermore, the regulator said that it has seen evidence of unregulated firms introducing consumers to issuers of high-risk investments, particularly online.

Unauthorised firms can only issue financial promotions of they are approved by an authorised person or are exempt under the Financial Promotion Order. Unauthorised firms communicating promotions within the scope of an exemption do not need to comply with the FCA’s financial promotion rules.

The FCA said it was “particularly concerned” that some unauthorised introducers were relying on the exemptions for promotions to high net worth and sophisticated investors to promote high-risk investments to consumers for whom it may not be appropriate.

It noted that some are communicating promotions without approval from an authorised person or exemption under the Financial Promotion Order.

“While breach of the financial promotion restriction is a criminal offence, these unregulated introducers are often hard to trace and sometimes based overseas which creates challenges for enforcement,” the regulator explained.

“As part of our consumer investments business priority, we are investigating how best to address the potential for consumer harm in all these areas.”

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