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Two and half years ago, I posted a blog on the dangers of the well-intentioned middle-class market interventions causing unintentional adverse consequences on low income families as a result of their “good intentions”.

Known as the law of unintended consequences, my article discussed the dangers of headline grabbing legislation against pay-day money lenders like While the chattering class tut-tut indignantly about the rip-off rates these “loan-shark” organisations were charging, banning or heavily restricting them would not eradicate the problem; only drive it underground. In so doing, those in desperation, denied access to finance, turn real loan sharks – people who operate underground, leaving borrowers without legal protection and exposed to even more extortionate rates of interest than before.

Recent news confirms that, while the short term lending has been cut back due to price caps, a proportion of those turned down for legal loans have turned to illegal lenders.

In other matters of the law of unintended consequences that pensioners’ savings are in danger of being swindled by fraudsters offering savers early access to the pension cash or promises of get-rich-quick schemes. However they end up stealing the victims’ money. Again, the dangers of such scams was something we warned of as recently as April.

Preventing unduly high credit charges is clearly laudable but in so doing, we have to recognise that for some, making legal credit difficult to come by could drive them to loan sharks where charges are likely to be even more onerous. The government has a duty to help such vulnerable people by, for instance, letting people know about credit unions as a point of contact for information and advice on alternative and potentially more affordable forms of credit.

Similarly while pension freedom may have been generally welcomed, the FCA needs to do more to highlight the danger of scams.   The FCA already highlights the dangers of scams in relation to investments. It is now time to highlight the danger of pensions scams.

No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting Advisers may charge for providing such advice and should confirm any cost beforehand.