As Pensions Minister Guy Opperman noted in his keynote speech to the PLSA conference on 14 October, scams are the subject of increasing parliamentary scrutiny. We’re pleased to have played our part in bringing this important issue to the attention of MPs and peers of all political persuasions.
In September, we published our report, Protecting People’s Pensions: Understanding and Preventing Scams, in conjunction with the Police Foundation, and it has added real substance to the debate. The Work and Pensions Select Committee, under the leadership of Stephen Timms MP, also launched an inquiry into scams – the first of three inquiries examining the pensions landscape five years on from pension freedoms. We submitted a summary of our scams report to that inquiry, and asked MPs across the House to table parliamentary questions on a range of key issues, including:
- The impact of Covid-19,
- The increase in online scams
- The approach taken by HMRC to pursuing victims
- How scams are being reported.
Mini debate in the Lords
Last week, the issue received focused attention in the House of Lords. Labour peer Baroness Warwick of Undercliffe, tabled an oral question: To ask Her Majesty’s Government, further to the report by the Police Foundation and The People’s Pension Protecting People’s Pensions: Understanding and Preventing Scams, published on 7 September, what action they are taking to protect people from pension scams?
In the Lords (unlike in the Commons) oral questions take the form of a mini debate, where peers can come in with supplementary points for up to ten minutes. Baroness Warwick’s supplementary question focused on one of the report’s key recommendations, ensuring that victims of pension fraud aren’t pursued by HMRC. Baroness Altmann took up the call for a central intelligence register; Baroness Drake highlighted the report’s recommendation of extending the powers of the regulator; Baroness Sherlock pointed out the key issue of the cold-calling ban excluding online activity; and Lord Taylor highlighted BAME vulnerability to scams and quoted our ethnicity pensions gap research. Crossbench peer Lord Loomba welcomed the report and calling for strengthened checks on company registrations. Most of the key issues and recommendations in the report were picked up.
Work and Pensions Committee
The Work and Pension Committee has so far heard from industry organisations including PSIG, Which? and PIMFA about both the scale of the problem and how it should be tackled. Earlier this month, the Financial Conduct Authority gave evidence that it’s investigating 85 companies for possible pension scam concerns.
On the back of hearing hours of compelling evidence, Committee chair Mr Timms signalled his intention to lay an amendment to the Pension Schemes Bill, which had its second reading in the Commons last week. This amendment, which has cross-party support, would enable scheme trustees to stop a transfer if red flags are raised. It builds on an earlier proposal by Margaret Snowdon, the chair of the Pension Scams Industry Group, who wants providers to be given the power to block a transfer amid any suspicions of fraud. One of the recommendations in our scams report called for powers which would enable trustees to flag up concerns over a transfer to the regulator with oversight by The Pensions Ombudsman, who has the necessary legal powers to adequately censor fraudsters.
Pension Schemes Bill
In its current form, the Bill contains clauses intended to restrict the statutory right to transfer when particular criteria are satisfied. Clauses specified include satisfying trustees about an individual’s place of residence or employment and that an individual has obtained information or guidance about the transfer from a prescribed person. This is better than nothing, as it will make it harder to operate a scam that masquerades as an occupational pension scheme where there’s a bogus employment relationship between scammer and victim.
A dogged scammer, however, will find a way around this as payslips can be fabricated and unwitting victims can be coached through guidance sessions. In addition, the measures currently in the Bill only apply to occupational pension schemes and do nothing in relation to transfers into substandard SIPPs.
The Bill is expected to begin its Committee stage (where it’s scrutinised in detail, line by line) in early November. While we can’t predict what the finished Bill will look like before it’s passed into law, we hope that the Government will listen to the strong concerns that have been expressed, recognise the plight of victims and ensure that the public have greater protections against this most pernicious of financial crimes.
Read the report, Protecting people’s pensions: understanding and preventing pension scams.