In general, we are no longer seeing early-access scams or pension liberation where victims are given false assurances of non-existent legal loopholes. For some time now it has all been about investment scams. There are really two types of scams. The first is where the member is persuaded to transfer their pension to another scheme with the promise of an attractive investment opportunity perhaps offering guaranteed returns. The second is not a pension transfer but rather where the member is persuaded to access some or all of their tax-free lump sum or pension savings to purchase some form of inappropriate investment. Some of these are entirely bogus and it is simply theft. 

One such example of such fraud is “cloned firm” scams. These scams occur when an investor is conned into believing that they are purchasing a genuine investment product (typically some form of bond). The scam is facilitated through the setting up of fake online investment comparison websites in order to capture prospective investors’ personal information and contact details. Once these details have been captured, the victim is contacted by the fraudsters pretending to be from the provider (frequently using fake email addresses which are made to look like email addresses of genuine members of staff) and offered an investment product. These fake products offer realistic rates of return so as not to raise concerns and even offer fake online servicing platforms so victims do not become suspicious. Websites have been created which closely resemble genuine login screen which allows victims to login and view the “bonds” they have purchased.

The new DWP statutory transfer regulations have no bearing on this second type of scam as they are perpetrated directly on the pension scheme member once they have received their tax-free cash payment or withdrawn funds under a drawdown facility. There is no transferring scheme to offer the protection of due diligence checks. 

We are also seeing a transition from more obvious and traditional forms of investment scam where the investment is in high-risk, esoteric investments (bamboo plantations, natural resources and overseas hotel developments for example) to investment platforms which facilitate investments in conventional funds but within an unnecessarily complex structure usually featuring the purchase of structured notes or offshore investment bonds which hides a myriad of fees and charges. This “fractional scamming” or “skimming” sees multiple entities taking a cut and the value of the underlying investments can be destroyed. Many transfer requests of concern are facilitated by overseas advisers and intermediaries to what have been termed “International SIPPs”.

It does feel though as if we are now in a different place as we look to combat both the outright criminals and the unscrupulous financial advisers and intermediaries who are involved. Not only have we seen government action through the new regulations but we have seen recent high-profile prosecutions and sentencing. The Pension Regulator’s Combat Scams Pledge is also a very laudable initiative which encourages industry to do everything it can to ensure that pension scheme members are aware of the dangers and that staff have sufficient expertise to identify the key warning signs. Over 400 firms and pension scheme trustees have so far made this commitment. There is no doubt though that more can be done and needs to be done.

The Pledge encourages membership of the Pension Scams Industry Forum (PSIF). By working together rather than in isolation, we can combine our resources to develop a fuller and more informed intelligence picture. PSIF helps us to identify trends and better understand the techniques and approaches of the scammers and how they evolve.  Sharing this information is vital to the industry as it is the industry itself which is the first line of defence against pension scam transfers.  It is trustees and administrators who see the requests to transfer first of all - before either our regulators or law enforcement agencies have any concerns reported to them. Keeping them empowered to spot anomalies is key.

It’s not only about increasing the number of member firms though. PSIF itself could do so much more with proper funding and resourcing. At the moment, it remains a voluntary forum reliant on the goodwill of its Chair and their employer. An industry-wide intelligence database would be an obvious enhancement which could deliver real value especially if such intelligence was also shared with our regulators and law enforcement. Only by working together and in partnership with our regulators and law enforcement agencies can we hope to combat the evils of scamming and prevent the devastation it causes.