Published On: Tue, Mar 12th, 2024

‘I’m a pensioner and I lost £96,000 to scammers in the space of just one cold call’ | Personal Finance | Finance

A pensioner lost £96,000 of her  to a cold caller who persuaded her into a “pension review”.

In 2014, Davina Frost received a phone call from an unregulated introducer, Portia Financial, who said she could end up with a larger and easier-to-manage  following a review.

She was then convinced to transfer her £96,000 defined benefit (DB) pension into a qualifying recognised overseas pension scheme (QROPS).

Around £51,000 was invested in a company called German Property Group (GPG) and the rest was invested in a mix of diversified mutual funds, consumer champion Which? reports.

GPG pledged to use investor’s money to redevelop listed buildings in Germany. Instead, Which? said it was a pyramid scheme, that later went into liquidation in 2020 owing around £1billion to investors.

Ms Frost contacted Which? Money in 2021 for help, who managed to recoup £39,000 of her savings after directly appealing to the CEO of STM Malta, the QROPs provider.

STM Malta had initially said the remaining funds could not be returned to the UK, nor were partial withdrawals permitted.

Ms Frost told Which? Money: “I wouldn’t have put money into something I thought was risky. The experience has left me feeling humiliated, depressed and angry.”

Which? said: “Putting money into a QROPs is rarely a good idea unless you’re actually moving overseas.” 

The Pensions Regulator is currently investigating the initial transfer, which could see a further £51,000 recovered.

The Financial Conduct Authority (FCA) recognises any “free” pension review offers as a scam. It said: “If you’re contacted unexpectedly and offered a free pension review, it’s likely to be a scam. Professional advice on pensions is not free.”

The regulator body added that most companies offering the “free” reviews aren’t authorised, despite falsely claiming they are.

They may also claim they don’t have to be authorised, as they aren’t providing the advice themselves. In other circumstances, they may claim to be acting on behalf of the FCA or MoneyHelper.

The scammers aim to convince people to move money from their pension into a high-risk scheme.

The pension pot is then invested in what could be deemed unusual investments, such as overseas property, forestry, storage units, care homes, biofuels or businesses people may not be familiar with.

People may be promised guaranteed returns or cash from their pension to tempt them to take up these offers.

As they’re promoted as long-term pension investments, the FCA noted: “It could be several years before you realise something is wrong.”

How to avoid a pension review scam

If someone gets a cold call about their pension, the FCA says the safest thing to do is “hang up”. It noted: “It’s illegal and probably a scam. If you get offers via email or text, you should simply ignore them.”

People can report pension cold calls to the Information Commissioner’s Office (ICO), the FCA, as well as Action Fraud.

The FCA added: “If you’re thinking about changing your pension arrangements, you should get financial guidance or advice beforehand.

“If you want to find an adviser, make sure they’re authorised by us. Never take advice from the company that contacted you, this may be part of the scam.”

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