The Financial Conduct Authority is alerting the public to be wary of unsolicited offers of pension reviews following the government's promise of free guidance and advice.
The FCA said it had evidenced that people were being contacted by an unexpected phone calls, emails and text messages with some companies claiming to be working on behalf of the government in regards to the recently announced commitment to introduce a service to provide free guidance for people at retirement.
Tracey McDermott, director of enforcement and financial crime at the FCA, said: 'People should be wary if they are contacted out of the blue by someone offering a "free pension review".
'Most of the companies offering this "service" are not authorised by us, and we're concerned that the reviews often end with pension pots placed in higher-risk, unregulated investments.'
These 'reviews' are designed to persuade people to move money saved in an existing personal or workplace pension to a self-invested personal pension (SIPP) or a small self-administered scheme (SSAS). The pension pot is then typically invested in unregulated investments like overseas property development, forestry or storage units known as store pods.
Danny Cox, head of financial planning at Hargreaves Lansdown, told The Actuary that the pensions industry should work together to support the regulator in cracking down on these 'unscrupulous firms'.
He said: 'Has this offer of free guidance accelerated the problem with these types of review? Seemingly it has. But I think pension advisers have offered free reviews to attract clients for a long time, so it's capitalising on that way of doing business.'
