United Kingdom

City watchdog warns over Coronavirus savings scams

The City watchdog has sounded the alarm over investment scams which may emerge during the corona- virus pandemic.

As stock markets plunge and interest rates hit record lows, the Financial Conduct Authority (FCA) is worried savers will be targeted by fraudsters.

Outlining its business plan, the FCA highlighted tackling investment scams as one of its top five priorities for the next three years. 

Scam alert: As stock markets plunge and interest rates hit record lows, the Financial Conduct Authority is worried savers will be targeted by fraudsters

It said pension freedoms introduced in 2015, and the move away from company final salary retirement schemes to stock market-linked pensions, have created 'significant risk of harm'.

But it said consumers have also been exposed to volatility caused by Covid-19. The watchdog said a key focus would be 'helping consumers avoid the scams that spring up as the pandemic develops'.

It said losses can be catastrophic, with investment scam victims losing an average of 22 years' of pension savings –almost three times their annual earnings. 

Gareth Shaw, head of money at Which?, said: 'It's vital that people don't panic and go looking for risky high-return investments, as we know the internet is awash with unscrupulous operators. 

'Savers should also be on the lookout for unsolicited calls, texts and emails from scammers trying to trick them out of their pensions.'

The FCA predicted the crisis would have a 'major impact' on the consumer credit market.

The watchdog is expected to confirm tomorrow temporary measures to protect households with debt problems.

These include ordering banks to freeze credit card and loan payments for those in financial difficulty. It also pledged to make 'faster and more effective decisions', under new interim chief executive Chris Woolard. 

He said: 'Coronavirus has altered the financial landscape dramatically. It is more important than ever that the FCA leads the way on protecting consumers, firms and the markets.'

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