I discovered recently that I had been living in a little bubble, doing what I can to prevent pension scammers gobbling up pension savings, when around us is a broader world of financial predators. I write this from the African veld where life is red in tooth and claw, having just watched a leopard stalk three young nyala outside my veranda. I was reminded of the 2013 Action Fraud campaign “Predators Stalk your Pension”. However, natural predators hunt only out of need, whereas financial scammers hunt out of greed.
Scammers destroy lives. The Pensions Regulator has been saying this for years now, but it makes little difference. What is truly disappointing is that it is a common view that financial scam victims are at fault. Victim blaming is the norm, which makes it easy to turn the other way. If it hasn’t happened to you, you don’t see why others could be fooled.
However, we also know that almost 50% of people would fall for a scam, because it is human nature to believe the best. We should therefore be more understanding and take stronger steps to reduce the scale of scamming. The longer we take to deal with the problem, the harder it becomes. A stitch in time saves nine.
Scamming is almost the go-to fraud type in the UK. Scammers don’t get caught, so it is almost a risk-free enterprise for them. But scams are not victimless crimes. Pensions and investment scams leave devastation in their wake, firstly because of the actual loss of hard-earned savings, but also because of the knock-on effect on the individual’s ability to retire in any comfort, their loss of confidence and self-esteem and the impact on a victim’s family life. We also need to take into account the future impact on social security, with greater reliance on the state for those who have been cheated of their own savings. This cost to the UK is huge and coordinated and serious action needs to be taken now.
I recently joined the Investment Fraud APPG as an adviser to their inquiry into investment and pensions fraud. PSIG and the APPG recently collaborated on a paper for government, calling out the issues and suggested solutions. It is a powerful, if depressing read, but its value is in highlighting the common features of the different types of financial fraud and showing that a few consistent measures could have a big impact.
Like in nature, actions have reactions. If you take out the butterflies, you don’t get caterpillars and you lose the birds which depend on them. If lions get the upper hand, hyenas will suffer and disease will increase. In finance, if you take out scammers, there will be fewer around, which will mean fewer victims, more long terms savings and benefits to the economy and future tax-take when those savings are spent.
Prevention is better than cure, but prevention is not just about educating savers so they don’t fall for a scam. It is not just about helping providers to spot scams before they take place. Both are absolutely essential, but allowing scammers to get the upper hand makes everyone’s job so much harder. Scammers become stronger and bolder – just like apex predators.
To prevent scams, fraudsters need to be weakened, which means we must hit them where it hurts, ie in their pocket. I welcome publication of the government’s new Fraud Strategy: Stopping Scams and Protecting the Public launched in May this year. This sensible strategy aims to stop fraud at source and pursue those responsible, wherever they are in the world. However, it appears to focus on high volume, low value internet-enabled fraud and entirely misses reference to investment, tax and pension fraud, where high losses and life destroying impact occurs.
There are excellent examples of progressive law enforcement in countries where investment fraudsters are vigorously pursued and their assets are seized quickly, while victims are treated fairly under the law. It is surely not a surprise that this resource prioritisation pays for itself and more, while the fraudsters’ business model becomes hard to sustain. A virtuous circle we would do well to emulate.
Margaret Snowdon, Chair of PSIG
