Pension Funds Insider

Pension Funds Insider brings the latest pensions news and industry insights; from investment and governance updates to new mandate appointments and pensions regulatory information.

Working to Combat Scams

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As we look forward with hope that the dedication, expertise and teamwork of our scientists, doctors and healthcare professionals will enable us to overcome this dreadful virus, so too in the world of pension scams we hope that the determination and focus of so many good people in the industry can really see us make a difference in the year ahead.

It is tragic that so many lives are ruined by the scammers who often prey on victims when they are at their most vulnerable. As with the pandemic, prevention is the key. We must stop the scammers before the funds are transferred because at that point it can often then be too late. Not only do some victims find that their retirement savings have gone, some victims of liberation scams will also face punitive additional tax charges as a result of the transfer.

It is both heartening and inspiring to work with colleagues in the Pension Scams Industry Group (PSIG), on Project Bloom (the multi-agency initiative chaired by the Pensions Regulator) and with the wider industry and to see the genuine commitment to protect pension scheme members. Many people are giving of their own personal time to try to do everything that they can. If I may use the words of Freddie Mercury and Queen, there is but One Vision. We have one goal and one mission and that is to stop the scammers.

We are currently working on the next update to the industry Code of Good Practice – one that is easier for practitioners and administrators to follow – and we aim to issue this in the coming weeks.

We are also working with the Pensions Regulator and the National Economic Crime Centre (NECC) to develop a “pension scams hub” as part of a national intelligence sharing framework. The concept is of a database which will capture, store and share information from the pensions industry on individuals and companies who are suspected of being involved in pension scamming. Trustees and providers would not be solely reliant on the intelligence gleaned from their own, individual experience of transfers of concern and could benefit from the information input by others. This information would then be shared with both regulators and with the police. Only by working together can we hope to combat some of the highly-sophisticated and complex scam networks.
The excellent Combat Scams Pledge initiative from the Pensions Regulator encourages trustees, administrators and providers to pledge their commitment to six steps to protect their members from scams. These are based on the good practice outlined within the PSIG Code. We are greatly encouraged at more than 100 firms have already signed up to this but we want to see more and we would encourage every organisation in the industry to do so.

The initiative also encourages firms to become members of the Pension Scams Industry Forum (PSIF). PSIF is part of PSIG and works to better share knowledge of scams across an ever-growing membership. Over 50 firms now participate in PSIF meetings.
PSIG is also working with the DWP as they look to use the powers within the Pension Schemes Bill to draft regulations to remove the statutory right to a transfer when certain red flags (key warning signs of a potential scam) are identified enabling the trustee then to refuse to transfer. Additional “amber flags” will require the member to take impartial guidance from the Money & Pensions Service (MaPS) before proceeding. DWP will consult on the regulations once the Bill has received Royal Assent with the aim of implementing the new protections as quickly as possible. The expectation of Guy Opperman MP, Minister for Pensions & Financial Inclusion, is that the regulations will “significantly and realistically prevent future scams”.

The FCA has also written to providers of International SIPPs. PSIG has long warned of fractional scamming or “skimming” where the investments are not so much in high risk, esoteric investments, but rather in more conventional offerings where the funds are eroded by excessive charges on the fund by the various different entities which are typically involved in the transfer and investment of the funds. Offshore bonds frequently feature in these scam arrangements.

It is also very encouraging to see the real focus and collaboration of MPs of all parties in the Work & Pensions Committee Pension Scams Inquiry chaired by Stephen Timms MP. The oral evidence sessions of the inquiry included powerful testimony from victims of scams together with expertise from Margaret Snowdon OBE, Chair of PSIG and Nicola Parish, Executive Director of

Frontline Regulation, Pensions Regulator, as well as representatives from the FCA and from law enforcement agencies. In her testimony, Nicola called for proper funding for Project Bloom echoing the sentiments expressed in the formal PSIG submission to the inquiry. At the moment, Bloom is unfunded and relies on the voluntary efforts of the member organisations to deliver its Strategic Action Plan (SAP). It is clear that we must have a fully funded, fully resourced and dedicated programme of work.

We have the one vision - to prevent the misery and heartache which pension scams cause. We can only deliver it by ensuring that industry, regulators and law enforcement work together and like Queen – in perfect harmony.

Tommy Burns
Risk & Financial Crime Manager, Phoenix Group & Deputy Chair, PSIG