Pensions News (PN) decided to take some time off a couple of weeks ago. In so doing, he visited a beautiful city in Tuscany, Italy and was held spellbound by its people, history, architecture, food, wine and its coffee.
PN particularly enjoyed the coffee, the lack of fuss around its being made, served and consumed and the fact that it was so consistently good. Although the vast majority of people with whom PN came into contact were pleasant, helpful and honest, PN’s attention was also struck by a number of individuals who attempted to trick other people into purchasing something or otherwise parting with cash. What they would do was to enquire of the bystander (invariably a tourist) of his or her whereabouts and then, on receiving an answer, ask the bystander to “give [him] five”. When the bystander obliged, he or she would find, at the point of contact with the other person, him or herself left with a sample of whatever it was that was being sold. The tourist would then be exhorted to buy it. Being already in possession of the something, the tourist would find it difficult to hand the something back and so, generally speaking, the tourist gave in and handed over some cash – if only to be left alone. Another scam which seemed common involved the trickster dropping a gold coloured ring behind (usually) a couple as they walked past. As the couple turned on hearing a metallic sound on the floor behind them, the person who had dropped the ring would emerge holding it and asking if it belonged to the couple. As denials emerged, the couple would then be passed by a small gang of other people who would help themselves to the distracted couple’s belongings.
You, the reader, may be relieved to read that PN is not about to explain how he became a victim of either or both of the scams described above. Fortunately for him, he didn’t. What struck PN then and strikes him still is the relative simplicity of each scam and the fact that each seemed to work so effectively.
Scams of a different nature have, of course, featured with a depressing frequency in the British press generally and the pensions and financial press particularly. The pension scams have tended to feature accounts of pension scheme members who, anxious to do something positive with their pension savings and worried about the value of those savings, turned to certain financial advisers for advice. You, the reader may recall that unfortunately for the individuals, all too many of the financial advisers turned out to either to be unskilled in giving financial advice or else highly skilled in fraud. Expertise in fraud, when topped up by an unscrupulous desire for personal enrichment, is a lethal combination when it confronts an anxious individual who is concerned enough to take advice, any advice, provided that the advice leads to action. Correspondingly, an anxious individual fuelled by a desire to do something about his/ her pension is an irresistible target for an unscrupulous fraudster with an overdeveloped taste for personal enrichment. Many of the stories referred to ended predictably; with the individual wondering where his or her pension had gone, wondering also why (s)he couldn’t contact his/ her “adviser” and wondering also how it was that HM Revenue and Customs was eager to contact him/ her to set up a payment plan for the tax bill that the individual’s unwise investment decision had caused.
Some commentators have, in the not too distant past, seemed to regard fraudsters as romantic types more interesting than poor old plodding us. These commentators argue that few of the frauds such as Nigerian Email Scam Mark I and Nigerian Email Scam Mark II (on which PN has commented in the past) would have worked without “our” greed. There may be something in that argument, but precisely none of the aforementioned frauds would have worked without the fraudster’s propensity to tell blatant lies. Admittedly a liar sometimes does not have to do a great deal of lying to get what he/ she wants but that’s the point of a different story. In the USA, before World War II, one sharp character made a lot of money in a hurry by placing a classified advertisement that disclosed nothing but a post office box number and the instruction, written in capital letters: HURRY LAST CHANCE TO SEND IN YOUR DOLLAR. As Mr Clive James observed when himself commenting on this event, we might all have sent in a dollar as a tribute to the fraudster’s simplicity - had we been around at the time.
The thing is that unfortunately, hoaxes work. It’s a good reason for not liking them. Evelyn Waugh and his friends (for instance) invented a modern artist called Bruno Hat. Apparently, everyone fell for it but why wouldn’t they? Some years ago, a radio presenter telephoned the then Prime Minister, Mr Tony Blair, by pretending to his switchboard that he was the then leader of the opposition, Mr William Hague. The hoaxer, who was able to give a fair approximation of Mr Hague’s resonant voice with his emphasis on vowel sounds, managed to get through the switchboard at 10 Downing Street although Mr Blair himself wasn’t fooled. Mr Blair was evidently on the lookout for trouble and, fortunately for him, his hearing was more acute than most. The switchboard operator hadn’t been on the lookout for a hoaxer but, as stated above, why should she have been?
There may be light at the end of the tunnel when it comes to pension scams. The Government has or has seemed to see sense inasmuch as it has seemed to get the point about cold calling and is ready to bring forward legislation to stop it happening. There are also signs that the policy are getting somewhere in what must have been a long, hard campaign to get results against pension scammers. The light comes in the form of a decision by the Courts to imprison two individuals following what has been described as “an elaborate pensions scam”. The individuals in question are Messrs Anthony Locke and Ray King. These individuals were imprisoned earlier this week after they created what the Court described as an “elaborate façade” comprising hundreds of documents to convince genuine companies, including the insurance / financial sides of Friends Life (part of Aviva) and Virgin Money, that they were operating an occupational pension scheme. According to FT Adviser, Mr Locke set up a website to attract people looking to “liberate” (a dangerous word when it comes to pensions) their pension funds. With the assistance of Mr King, Mr Locke offered applicants an “upfront payment” (two more dangerous words in pensions – particularly if you are under 55) equivalent to half their pension pot however; rather than invest the remaining funds, the money was then passed through offshore accounts and, ultimately, spent on luxury cars, holidays and gambling binges. The two individuals have been sentenced, following a six-week trial, to five and three years’ incarceration respectively. One’s view of the sentences handed out will depend on who you are or who you represent. PN knows a number of highly qualified independent financial advisers who, resentful of the bad name individuals such as Mr Locke and Mr King have given their profession, consider five and three year sentences to be insufficient.
The real losers in this matter are, of course, the individuals whose pensions have been lost as a result of the unscrupulous, sadistic streak in the fraudsters. As the investigating officer involved in the case pointed out, “not only have the victims lost half their pensions but now may face financial penalties from HMRC who will want to recover the lost tax revenue”. A warning; anyone who tells you that you can have half the value of your pension as cash without there being any tax consequence is likely to be a fraudster. Interlude over, we can all get back to the issues involved in dealing with the date protection legislation.
Until next time……