Fraudsters are using online adverts to scam pension savers on an “industrial scale”, the City watchdog’s head of enforcement warned MPs.
Mark Steward, an executive director at the Financial Conduct Authority (FCA), told the Work and Pensions Committee that criminals can “very easily” create online adverts for fake investments, negating the need to produce glossy brochures or set up fake offices.
He said scammers can "industrialise this process" and run multiple advertisements with various offers on a daily basis.
Investment scams vary but usually involve promises of huge, inflation-beating returns which are often claimed to be “guaranteed”.
Victims, who could be pension savers looking to build a nest egg for retirement, can lose tens of thousands of pounds when the so-called investment opportunity turns out to be fabricated.
Mr Steward highlighted an increase in online advertising "of what look like genuine opportunities but in fact are fraudulent or scam-like".
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He added: "It’s very easy for a scammer who in the old days might have to set up quite a sophisticated outfit of glossy brochures, office fronts, the appearance of a legitimate business.
"Now all they need is online advertisements, which can be created very easily. The identifying details, names, addresses that might appear on the advertisements are not checked, so invariably they’re false.
"The scammer has anonymity in that process."
Mr Steward also warned households who may have suffered financially because of the pandemic to be wary of offers of a “free pension review”, which he said could be the “first step on a process that will lead someone to investing in something that is too good to be true”.
The committee heard more than £30 million has been reported as having been lost by pension savers to scams over the past three years, although the true total is likely to be higher.
Nicola Parish, executive director of frontline regulation at the Pensions Regulator, said the pension freedoms, which allow those over the age of 55 to dip into their retirement savings, meant scammers no longer need to set up fake pension funds to target victims.
Mr Steward said that campaigns to highlight the risk of fraud to consumers had been successful but that there needed to be more investment in the issue.
Graeme Biggar, director general, National Economic Crime Centre told the committee: "What we’re looking to do next is to move onto fake comparison websites, which is this new gateway into investment frauds, to spot those and take them down at source."