As I sat down to write this piece, I saw the sad news that the Queen had passed away at Balmoral. I also heard that the new King had been staying in Dumfries House, my childhood stomping ground. Feeling strangely connected, I decided to walk down to the Palace to pay my respects. Soaking wet, squashed and jostled, it nevertheless felt right to join hundreds of others at the gates. Surprisingly, I seemed to be the oldest person in the crowd by a couple of decades.
I reflected that 12 years ago, Her Majesty graciously saw fit to appoint me an Officer of the British Empire for my voluntary work in pensions, and I have the warrant and the gold medal to remind me how privileged I was. Describing me as “trusty and well beloved”, the Honour inspired me to keep going, to keep doing my best to improve outcomes and protect ordinary people from poor practice and scammers. Ironically that was also the time that pension scamming took off and I had no idea how much still had to be done.
Scams have changed, but somehow remain the same. More and more people have joined the fight against pension scams and we have caught the attention of government and regulators, who began to recognise that scammers in particular are relentless and determined and that people who fall for their patter are not complicit. Victims are not criminals and they don’t deserve to be treated as such. They deserve support and they deserve to be treated with respect. They deserve to be believed and they deserve to have government on their side.
The most disappointing thing for me after all these years is that we often have to fight “the system” as well as the bad actors. It is ridiculous that different parts of government have different views on scams and on who is to blame. HMRC could be said to have facilitated scams through years of weak scheme registration processes (to save a few bob) – the same HMRC that levies tax penalties on scam victims and the same HMRC that is reluctant to fix the problem, even though the cost of doing so would be modest.
Slow action on industry concerns and out of touch legislation made it easier for scammers and more difficult for schemes, but crucially also allowed losses to build up to £billions and thousands of people. A culture of victim blaming has led to a lot of needless distress and unbelievable delays in getting justice.
There is a chance that some scam victims, where there is proven fraud, could receive some benefits from the scheme used to scam them. However, it is equally likely that any compensation given to those schemes will merely be used to pay the tax man. Robbing Peter to pay Paul. You couldn’t make it up.
Happily some things are changing. After years of pushing, we have very welcome anti scam regulations (not perfect, but a huge leap forward) and much more effective publicity on the dangers of scams. What we need now is a determination by the Pensions Ombudsman that makes clear his stance on claims for refused or delayed transfers where due diligence has turned up scams signs. We need the Ombudsman to support the judgment of trustees who follow the Regulations/PSIG Code in principle.
Another piece of good news is that transfer scams are already reducing, although pockets of resistance can still be found. Transfer scams are less rewarding for scammers now, because they are under more scrutiny and it’s likely to be a hassle for them. However, other financial scams against individuals and schemes continue to grow and flourish, because there is still easy money to be made.
Government prefers hard evidence of scamming and it is notoriously difficult to assess. Collecting data is an extra cost and successful scams can take years to uncover. Reporting mechanisms are not really fit for purpose, both undercounting and duplicating. Without a single source of truth, we are all guessing, and while PSIG has made some good assumptions over the years, my preference is to get on with protecting because it’s the right thing to do.
According to Experian, UK losses to fraud and scams generally are estimated to be a mind boggling £193bn a year (of which pension fraud is thought to be close to £6bn). That is £6,000 a second. In 2011, the National Fraud Authority found that fraud and scams had reached c£38bn a year, most of it against the public sector. Now the tables have turned and the vast majority (£145bn) of fraud and scams are against the private sector and individuals. The public sector rate remains fairly unchanged. £193bn a year is around the same amount government is expected to borrow to subsidise current runaway energy costs and similar to the extra public spending on the COVID pandemic in 2020/21.
According to Which?, the cost to the wellbeing of those who are scammed is £9.3bn a year. Those figures are frightening. The cost of fraud and scams is so significant it’s like the economy a small country being taken out of our hands every year. We must pay attention and government, regulators, police and courts must act in lockstep.
Margaret Snowdon OBE, Chair of PSIG
