The All-Party Parliamentary Group has announced plans to boost the public’s awareness of the risk of pension scams.
There has been a significant rise in the number of scams since the introduction of pension freedom rules five years ago, which gave the over 55s unfettered access to these funds, despite numerous attempts to stop them.
However there are concerns that incidents could escalate significantly in the wake of the current coronavirus pandemic, which has caused dramatic falls in the stock market.
Former pension minister Baroness Altmann points says that many different initiatives have been tried. Project Bloom was started in 2012, as a multi-agency taskforce which includes Regulators, the Police and Government Departments. In 2014, the FCA introduced its ScamSmart campaign to warn about investment scams. After this, a Project Scorpion initiative saw City of London Policy and DWP work together to try to alert more people about scams.
The Pensions Scams Industry Group introduced a code of practice for trustees and administrators to use before agreeing to transfer people’s pension savings, but this is not compulsory. Although some scams have been prevented by this code, not all providers are using it. In 2018, the FCA and the Pensions Regulator launched a ScamSmart campaign for Pension Fraud.
Legislation was introduced that was supposed to ban cold-calling and there is a new Bill going through Parliament which aims to tighten the rules for providers to make more checks before transferring pensions.
Altmann argues that none of these seems to have succeeded in protecting consumers and says the problem has grown significantly and even the ban on cold-calling is not a total ban, since the new laws allow someone to call you if you have a pension with their firm. Therefore, scammers might call and pretend to represent a major pension providers and, if the person happens to have a pension with that company, they will not realise this is a fraud.
Andy Agathangelou, founder of the Transparency Task Force says: “It is clear that there is a need for more and better thinking around what should be done to mitigate the risk of the UK’s pension-saving public falling prey to sophisticated scammers; and also to help those that have been scammed. We are doing all we can to support this initiative including acting as the Secretariat for the new APPG. I hope every Parliamentarian who cares will get in touch and get involved.”
Baroness Altmann says: “As more people are forced to stay at home during the current coronavirus crisis and investment markets have plunged, the risks of cold-calling criminals or on-line fraudsters reaching more savers and luring them into scam investments have grown. Government and Regulators have been trying to deal with this problem for years, but it continues to worsen.
“The Regulatory system has focused mostly on trying to catch the criminals after fraud has already occurred – but this takes such a long time that many more people have usually lost out by the time any action is taken. There seems to have been inadequate early warning, or co-ordination and insufficient information to alert consumers to the risks of scams. There have been intermittent advertising campaigns but many people have lost out during the time between first report of a scam and the actual proof and prosecution (if any) of perpetrators. It is vital that we improve early warning systems and liaison between advisers, providers and regulators, so that more scams can be prevented.”
Aegon head of pensions Kate Smith says: “Unfortunately the current coronavirus pandemic, combined with the twin factors of a dramatic fall in the stock market and historically low interest rates, have created the perfect conditions for scammers to prey on people, enticing them with the promise of lucrative investment returns.”
She welcomed this new attempt to raise awareness of this issue and in doing so help to protect members of the public.
Smith adds: “Pension savers need to be ever vigilant to the threat of scammers, who constantly look for new ways to take advantage and part people from their hard earned pensions. Anything to keep the risk of pension scams at the front of people’s minds is to be welcomed.
“We need to amplify this with frequent messages about potential scams and reminders that pension cold-calling is illegal in order to keep people’s pensions safe. By working together we can all do our bit to help make this happen.”