Conservative MPs have told the FCA to remain vigilant over a fresh wave of pension rip-offs and scams in the wake of the Budget pension reforms.
Speaking at the Conservative party conference this afternoon, MPs warned the changes create an opportunity for con artists to target the vulnerable.
The new freedoms will allow anyone over 55 to access their pension pot in full from next April and MPs warned scammers are evolving.
Parliamentary Private Secretary to work and pensions secretary Iain Duncan Smith and Conservative MP Charlie Elphicke said: “I really hate these people who target consumers, prey on them and try to con them. Whether it’s fake charities calling up grannies and trying to con them or people trying to get money from your pension pot, they are all different sides of the same coin. It is unacceptable.
“We need the FCA to be very vigilant, very strong and very tough in making sure we don’t have people preyed upon, particularly elderly people, as has happened in the past.
“We want people to have diverse investments and make decisions that will work best for themselves in the long-term. We want the FCA to be able to make criminal sanctions for people who do this type of thing.”
Conservative MP and Treasury select committee member Mark Garnier added: “When [the new pension freedoms] were announced, some people said this was an opportunity for people to blow their money when the real point is that there is another opportunity for rip-offs. There is a big question about conduct regulation of the marketplace.”
Industry experts also warned that pension liberators are evolving into other scams already to take advantage of the new rules.
Standard Life head of corporate strategy and propositions Jamie Jenkins said: “Scams are a real concern. We are seeing the scammer evolve as the rules on pensions evolve.
“They have moved from saying they will liberate pots before you are 55 to saying that when you are 55 you can take all your money out, don’t worry about the tax and they will give you 25 per cent guaranteed returns per annum on some property development in Spain. It’s a real concern and we have to make people aware of it.”
LV= managing director of retirement solutions John Perks said regulated advice is crucial to defeating the con artists.
He said: “If we can create a system that direct people to and adviser then you can avoid the scammers. But I agree the FCA has to be extremely vigilant, extremely tight and put some financial penalties in place.