Legislation that will give trustees greater powers to block potential ‘scam’ transfers may not go far enough, and could fail to flag up one in three scams, according to data from XPS.
The company has welcomed the Department of Work and Pensions’ consultation on this new legislation — but says that changes will not pick up all cases, so ongoing vigilance from trustees is vital.
The legislation will allow trustees to block transfers from proceeding in cases where certain conditions are not met. However XPS says that one in three high risk transfers would not be flagged under proposed legislation.
Its data shows that one in three high risk pension transfers since July 2018 would have satisfied the ‘first condition’ of the DWP’s proposed legislation designed to reduce scams. The data comes from XPS’ Scam Protection Service, which allows trustees to track, analyse and respond to developments in scam activity.
The proposed conditions will give trustees greater ability to prevent transfers in certain circumstances. These conditions are intended to enable trustees to restrict transfers where there is a risk of a pension scam.
However, to minimise the chance of a scam, trustees must continue to carry out robust scam protection measures, such as those recommended by the Pension Scams Industry Group Code on combating pension scams. Measures include analysing incoming requests and speaking with members to ensure they understand any risks.
XPS Pensions Group partner Mark Barlow says: “The ability for trustees to block transfers in certain circumstances is a welcome step forward in the fight against pension scams. However, we are concerned that these conditions could suggest that certain transfers are ‘scam free’ when we know this not to be the case.
“Evidence from our Scam Protection Service demonstrates how robust scam protection measures will continue to be vital in protecting member outcomes”.