On 16th September I had the privilege of giving evidence to the Work and Pensions Committee on Pension Scams. It was a big day for me, it was also the day after my husband’s 60th birthday so last-minute cramming was out of the question. My aim was to raise a number of issues with the committee; things that I and my voluntary group, PSIG, have been pressing for several years.

The prevalence of pension scams is hard to know because of under reporting. Authorities rely on scammed members reporting to Action Fraud, and as we know, very few victims do so for all sorts of reasons and some victims don’t even yet know they have been conned. I shared with the Committee that our estimate is that around £10bn is likely to have been lost since 2015, based on the number of transfers that go ahead (c200,000 a year) and the proportion which we believe likely to be scams. As many as 40,000 people could have been affected. Action Fraud hears from around 180 people a year, while we think the real number is around 10,000! c£2.5bn still sits in pension savings today, a rich seam for scammers and if we don’t do something now, many people will suffer.

I have sent paper after paper to various authorities, pleading for change to make it harder for scammers to operate and to stop vast sums of people’s savings being stolen from under their noses. PSIG is completely unfunded and relies purely on the time given by a few individuals and organisations who share a common vision, but I truly believe that in five years we have accomplished more than all the authorities put together. Our passion has driven us.

Our Code of Good Practice sets out due diligence most likely to spot scams, and 80% of major providers use it, according to their recent research published by the Police Foundation and The People’s Pension. Our Forum allows member organisations to share valuable intelligence every month on entities of concern. Together, we have prevented countless numbers of people from falling victim to scams and this is very important. Scams need to be prevented before they happen because they can’t easily be pursued afterwards. When its gone, its sadly often gone.

We have recommended changes from banning cold calling, banning contingent charging to calling for a change in the law to limit the statutory right to transfer when certain scam signs are present. We have also proposed a change in tax law to stop HMRC from further penalising victims of scams through the horribly cruel and inflexible practice of charging unauthorised payment tax charges.

And finally, with a new Chair of the Work and Pensions Committee, we had a breakthrough. Stephen Timms understood the issue straight away, and along with the Conservative MP, Nigel Mills, agreed to table our amendment to the Pension Schemes Bill. Stephen has spoken to me at length and Nigel has met with my fantastic Deputy, Tommy Burns and his colleague, Steven Hill from Phoenix, to explain the importance of what we’re asking for. But it’s not a done deal.

Let me talk a little about our proposed amendment. While we want to make it harder for people to be scammed, what we are asking for is a restriction to the freedom of the individual to transfer his pension savings to wherever he wants, provided that scheme is not illegal. Restricting this is against government policy, so has to be carefully managed. We all remember the Hughes case, which determined that the statutory right to transfer held, even where there was a strong likelihood that the individual was being scammed. That judgement was a hammer blow to member protection.

There are already a couple of amendments included in the Bill, namely removing the statutory right to transfer where an employment link to the scheme can’t be evidenced and making it a requirement to take prescribed guidance where there may be a scam. On the first, no employment link is needed for a transfers to personal pensions, which account for over 90% of transfers, so a bit of a damp squib, but every little helps. The guidance requirement is welcome and is part of the PSIG Code already, where we ask schemes to talk to the members or refer them to TPAS where scams signs are present. Our research shows that 25% of people who talk to the administrator or TPAS, decide to withdraw the transfer request. Making it mandatory is a step in the right direction, but we need to remember that the scammers have already coached their victims to persevere with their chosen path (because scammers’ streets are paved with gold, right?). We want to see the right to transfer removed, where any transfer, whether to an occupational pension scheme or a personal pension, shows certain scam signs. We want the “certain signs” to be included so that where they are evidenced, there would be no statutory right to transfer and trustees would be safe refusing .

We suggest the key scams indicators are:

· The receiving scheme or parties involved in the transfer show up on the FCA Warning List

We would like to include many of the other signs set out in the PSIG Code, like fees and charges being excessive or the member being pressured to sign quickly, but those are better set out in more flexible regulation than on the face of a Bill.

However, we were determined to fight on, and here we are, a change to the law on the statutory right to transfer within our grasp and interest now being raised on the proposed change to tax law to give HMRC discretion to give an amnesty to certain early scams victims.

I’m keeping my fingers crossed. I really hope this is the beginning of the end for pension scamming. If we lose this opportunity to get in front, the efforts and my team and many others will have been in vain.

1. Impact on victims

a. Suitable redress pension scams?

b. How much pension is returned to victims?

c. Should government act on HMRC tax bills?

2. Aftermath

a. What support do people need

b. Will better financial education help?