Newsletter – February 2017

Since the freedoms on pensions were introduced in 2015, there has been a tenfold increase in pension scammers trying to use the opportunities of pension flexibilities to their advantage. 

One of the most obvious, but effective, ways in which they work is cold calling. This has become such a problem that the Department for Work and Pensions is holding a consultation on this threat until the middle of February. Their proposals include the following:

• to ban cold calling
• to restrict how and to whom people transfer their pensions, to ensure that the schemes are legitimate
• to make it harder for fraudsters to set up pension schemes that are likely to be used for scamming.

A ban on cold calling regarding pensions would definitely be beneficial; in fact, a ban on cold calling in general would be excellent! But if you know that you will never be called about your pension you can be sure that if you do receive a call, it is not genuine.

Please be extra vigilant if people contact you about your pension. In particular, look out for those who claim they have been “instructed by the government” to offer free pension reviews, or those who offer a loophole that means you can access your pension before the age of 55 … because this simply is not true.

As always, if you are unsure about any calls or communications you have received then please contact us before taking any action.

In the hundreds of cases reported to Action Fraud since May last year, fraudsters have been  continually requesting victims purchase Apple iTunes gift cards as a means of payment for cons involving Her Majesty Revenues and Customs (HMRC).

The fraudsters are using the following contact methods to defraud people:

• Voicemails: Fraudsters are leaving victims automated voicemails stating they owe HMRC unpaid taxes. When victims call back on the number provided, they are told that there is a warrant out for their arrest, unless they make payment via iTunes Vouchers.

• Spoofed calls: Fraudsters are cold calling victims using a spoofed 0300 200 3300 number and convincing them that they owe unpaid tax to HMRC.

• Text messages: Fraudsters are sending text messages requesting victims to urgently call back on the number provided. When victims call back, they are told that there is a case being built against them for an outstanding debt and they must pay immediately.

Fraudsters are using iTunes gift cards to collect money from victims because they can be easily redeemed and sold on. The scammers don’t need the physical card to redeem the value and instead get victims to read out the serial code on the back over the phone to them.

Action Fraud has been working with Apple and HMRC to warn people about this type of fraud.

How to protect yourself

• HMRC will never use text message to inform about a tax rebate or penalty.
• HMRC will never ask for any payment in the form of iTunes Vouchers.
• HMRC will only post out a P800 tax calculations, in circumstances of under or overpayment of taxes, if you’re employed or get a pension.
• Payments using iTunes Vouchers may not be recoverable.
• Telephone numbers and text messages can easily be spoofed. You should not trust the number you see on your telephone display as proving the caller is genuinely calling from HMRC.
• Be protective of divulging other personal details such as National Insurance number, passport number and bank details over the telephone.
• If you receive an unexpected call, whereby the caller requests an advance fee in the form of iTunes gift cards, the call should immediately be terminated.

If you have been affected by this, or any other scam, report it to Action Fraud by calling
0300 123 2040, or by using the online reporting tool at www.actionfraud.police.uk

The well-known investment provider St James’s Place (SJP) has been through the wringer in the press over the past few weeks about their transparency regarding fees. 

The issue is not so much to do with the amount of fees they were charging but more to do with the fact that information on their fee structure was difficult to obtain and details of the penalties and fees applied were not clearly disclosed.

It was reported that a customer was forced to involve The Sunday Times’s “Money” publication in order to finally establish SJP’s exact fees over the six years he was a client. Whilst we understand that it is difficult to calculate fees precisely when dealing with the fluctuations of investments, it should be possible to provide close approximations that would satisfy customers. In fact, if they had simply disclosed all fees at the outset, then this situation could have been avoided!

This is not the first time that SJP has come under scrutiny for lack of clarity when disclosing their fees. At the end of 2015, acting on concerns raised by customers, the Financial Conduct Authority launched an investigation into the transparency of the company’s charging policies. They discovered that SJP were the only one out of the UK’s ten largest fund providers NOT to provide their charging structure online and up front. This does pose the question: what do they have to hide?

Another, and possibly the most shocking, revelation is that SJP impose a six-year penalty on all contributions! Six years! That is a long time to have your money locked away with no guarantee of returns! This penalty applies when you try to withdraw or transfer your investments and you have not paid an up-front fee. One customer, not aware of this penalty and unhappy with his investment performance, tried to transfer to another provider. He was told that to do so would incur fees of £20,000. The customer had to decide if it was worth £20,000 in fees just to go elsewhere for better performance. Many people would consider this to be not worth it, remaining trapped for the six year period with a company they do not respect and in an investment environment they are unhappy with. Not ideal, I am sure you would agree.

SJP advisers are “restricted” in their advice – in other words, they can only recommend SJP funds as this is where they make the most money. They are paid a commission for every penny invested with them. So, whilst they may follow the rules and send you the small print about fees and charges, perhaps they are unlikely to be as candid about the penalties and charges if they feel this might discourage you from investing.

Our view on this, and one we put into practice, is that it is better for our clients (and for us) to disclose all fees up front. In this way there is no uncertainty further down the line and our clients feel they are being treated fairly. Our advice is independent and considers the entire marketplace, so we invest in the best funds for our clients and not in the ones that will pay us the most. If you have friends or family members in need of financial advice, please pass the message along and save them a lot of aggravation – and possibly a lot of money – in the future.