Nearly five hundred people have so far completed a “Pensions Safeguarding Guidance” interview since new anti-scam rules were introduced at the end of November 2021, according to a new Freedom of Information request by LCP.
Under the rules, pension schemes are now required to check pension transfers to see if they trigger ‘red’ or ‘amber’ flags indicating the potential for scams. When an ‘amber flag’ is raised, the member must show proof of completing an anti-scam ‘safeguarding’ interview before the transfer may be processed.
According to DWP guidance, examples of risk factors leading to amber flags would include high risk or unregulated investments included in the receiving scheme, fees being charged by the receiving scheme are unclear or high, proposed investment structures are complicated or unorthodox, the receiving scheme includes overseas investments or any of the advisers are based overseas or there has been a high volume of transfers to a single receiving scheme or involving a single adviser or firm
LCP filed a Freedom of Information request with the Money and Pension Service, which oversees the guidance interviews. It reveals that out of 792 contacts, 488 have resulted in completed interviews, with another 178 in the works. A little more than 100 interviews were cancelled, the member did not show up, or the interview could not be completed for any reason.
LCP senior consultant Daniel Jacobson says: “It is early days for the new regime but it is clear that hundreds of people have already been required to take part in an anti-scam interview before their pension transfer could go ahead. At this stage, we do not know whether there was an actual risk of a scam in many – or indeed any – of these cases, or whether providers are simply routinely referring a large proportion of potential transfers for guidance, rather than carrying out the expected due diligence under the new transfer regulations.
“We also do not yet have data on whether the member simply ‘ticked the box’ by taking part in an interview but then carried on with the planned transfer regardless. It is very important that DWP and the Money and Pensions Service undertake research into what sorts of cases are being referred, what happens during these conversations and how consumer behaviour is being altered as a result. Only then can we say for sure whether these new measures are genuinely protecting consumers”.
