Recovered £52,250 - Pension Release Scam
Client was persuaded to transfer his pension into a fraudulent "high-yield" investment scheme through a cold call.
How they were scammed
Michael, aged 54, was cold-called by a "pension specialist" who claimed his current pension was underperforming and offered a transfer to a "government-backed" high-yield overseas property fund promising 18% annual returns. Over several months, Michael was persuaded to transfer his entire pension pot of £95,000 into the scheme, which turned out to be investing in non-existent properties in Portugal.
When they contacted us
Michael contacted us when the quarterly "dividend" payments stopped and the fund's website was taken offline. He had already lost 6 months of expected income.
Our investigation
Our investigation revealed a chain of three companies: the cold-calling operation (UK), the pension transfer facilitator (Isle of Man), and the investment scheme itself (Portugal). We identified that the introducer received 15% commission on every pension transferred, and the scheme operators had diverted 40% of invested funds to personal accounts.
Challenges faced
Pension transfers involve complex regulatory frameworks. The Isle of Man entity complicated jurisdiction issues, and the Portuguese scheme operated in a regulatory grey area. Michael had signed documents stating he understood the risks, which the defendants attempted to use as a defence.
Breakthrough moment
We identified that the UK introducer was not FCA-authorised to provide pension transfer advice, making the entire transfer process unlawful regardless of any signed disclaimers. This regulatory breach formed the foundation of our legal action.
Successful recovery
Legal action against the unauthorised introducer recovered £28,000 from their professional indemnity insurance. The Isle of Man entity settled for £15,000 to avoid regulatory action. Portuguese legal partners recovered £9,250 from the scheme's remaining assets. Total recovery: £52,250 (55%). The case was referred to the FCA for regulatory action.
Lessons learned
- Cold calls about pensions are always illegal in the UK - hang up and contact us if you are unsure
- Never transfer pension funds based on unsolicited advice
- "Government-backed" investment schemes that are cold-called are fraudulent
- Pension transfer advice must come from FCA-authorised advisers only
Prevention tips
- Report any cold calls about pensions to the FCA immediately
- Only take pension advice from FCA-authorised independent financial advisers
- Be extremely wary of any scheme promising returns significantly above market rates
- Check the Pension Scam awareness resources at pensionscold.com
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