Pension scams – it feels like we might be winning

This is not a public information campaign building on member education to clearly inform members of the risks of being scammed. It also is not a new police campaign to shut down the criminals that steal people’s financial futures.

It is not record investment in fraud-prevention measures, or even an inclusion in the online safety bill measures to stop the false advertising all over various social media platforms that draw people into their doom. We still need these things to be happening.

However, what it is, and in general we should be pleased about this, is a whacking great stick to stop transfers going to a scam arrangement.

We all have much to learn in making these new powers work to their full capacity, and the work involved in some transfers may be detailed and time-consuming

As pension professionals reading this, you may well be aware of cases where everyone is convinced that the transfer is going to a scam and the member is going to miss out.

There is nothing you can do to stop them. You cannot stand in the way of “me and my money”. After all, we are the bad guys — “my adviser said you would say this” is a line not unfamiliar to our frontline administration teams.

Rules won’t stop members’ complaints

The new rules to stop transfers where there are clear warning flags will not stop these cries of complaint. In fact, they may get louder, as while previously the scheme would acquiesce and allow the transfer, we now have the power to say no.

No, the person you are about to entrust your hard-earned pension is going to steal your money. That may not be now but it will happen, slowly but surely, until the whole thing is gone.

Pension administrators, for it is they who are on the frontline of this, have had the broad due diligence expertise to implement these new requirements thanks to previous campaigns for the Pensions Regulator, and also the frankly excellent work of the Pension Scams Industry Group, which have been encouraging various lines of enquiry to discern the dodgy transfers as best practice.

This has resulted in the development of a further string to the already taught bow of your modern-day pensions administrator. They have developed the soft skills via clear written communications and the subtle conversational skills to identify those that are at risk.

It is for this reason I am completely confident that these new powers will save millions of pounds’ worth of potential scams.

However, the problem will be the collision course with those members who are hell-bent on making the transfer.

Trustees will be called to intervene

Trustees need to be aware that we will be coming to you for those cases where we think the pension should be stopped. You may have delegated the role to us, but where we need to ultimately determine whether the transfer happens, we will be coming to you.

You need to be aware of the scams and their tell-tale signs — completing TPR’s toolkit module on this is highly recommended. You will need to be sure that we are stopping a transfer for the right reasons.

We generally see three reactions from members when they are transferring to a scam. Complete silence when we have told them — and the transfer stops — anger that we are standing in the way, and indeed gratitude.

We need to be ready for those members that are going to fight all the way. Yes, some of these may be false positives, and when the evidence is fully supplied the transfer is okay. But for others we are right. It is then that attention will turn to the Pensions Ombudsman and we are hoping it gives these cases the short shrift they deserve.

We all have much to learn in making these new powers work to their full capacity, and the work involved in some transfers may be detailed and time-consuming. We need to be clear with members why we are doing this. Trustees also need to understand that some cases may result in additional cost as the work involved is increased.

Scams will not stop, but the new rules can be an effective tool to end fake, small self-administered schemes and dodgy overseas investment arrangements.

Our next job is then to encourage our legislators to do more and go further to stop other pension and investment scams. The fight is not over, but we might just start to win.

David Brooks is a technical director at Broadstone