Scams burden remains in spite of HMRC registration

HM Revenue & Customs has established more stringent processes for registering schemes and transferring members’ funds in order to combat pension liberation.

Independent trustees were appointed by the regulator to administer such schemes, after City of London Police carried out a series of raids on organisations accused of involvement in pension liberation fraud. The High Court was asked to determine the legal status of these schemes in light of ambiguities in the documentation.

The regulator has several powers it can use to disrupt pension liberation fraud including suspending and prohibiting trustees, appointing independent trustees to schemes to protect assets, freezing bank accounts and repatriating monies.

Dalriada Trustees and Pi Consulting argued the schemes to which they had been appointed as independent trustee were occupational pension schemes, while the regulator argued against.

The parties were not in dispute but both sides of the argument had to be represented to enable the court to reach its decision.

The watchdog issued its so-called scorpion guidance in February to raise awareness of pension liberation among schemes and members.

“They’ve tried to give guidance to trustees and give guidance to members; they haven’t done a one-size-fits-all communication,” said Katherine Dandy, head of pension disputes at law firm Sackers.

However she said it is frustrating for those reporting schemes they suspect to be fraudulent to the regulator not to be told whether they are already on their watch list.

“And so you’re wanting to be able to say to the member, ‘The Pensions Regulator is investigating this pension scheme’, but you can’t because you don’t know whether it is or it isn’t,” Dandy said.

A spokesperson for the regulator said it had concerns this would act as a false assurance to those executing transfers, who should still be executing due diligence on the receiving scheme.

“We also have concerns that those running these schemes can simply set up new schemes with different names, making the watch list ineffective,” the spokesperson said. “We will not be pursuing this option.”

What the High Court ruling means for transfers

A High Court ruling last week established the Pensions Regulator’s authority to take action against schemes it believes to be fraudulent.

Independent trustees were appointed by the regulator to administer such schemes, after City of London Police carried out a series of raids on organisations accused of involvement in pension liberation fraud. The High Court was asked to determine the legal status of these schemes in light of ambiguities in the documentation.

The regulator has several powers it can use to disrupt pension liberation fraud including suspending and prohibiting trustees, appointing independent trustees to schemes to protect assets, freezing bank accounts and repatriating monies.

Dalriada Trustees and Pi Consulting argued the schemes to which they had been appointed as independent trustee were occupational pension schemes, while the regulator argued against.

The parties were not in dispute but both sides of the argument had to be represented to enable the court to reach its decision.

The watchdog issued its so-called scorpion guidance in February to raise awareness of pension liberation among schemes and members.

“They’ve tried to give guidance to trustees and give guidance to members; they haven’t done a one-size-fits-all communication,” said Katherine Dandy, head of pension disputes at law firm Sackers.

However she said it is frustrating for those reporting schemes they suspect to be fraudulent to the regulator not to be told whether they are already on their watch list.

“And so you’re wanting to be able to say to the member, ‘The Pensions Regulator is investigating this pension scheme’, but you can’t because you don’t know whether it is or it isn’t,” Dandy said.

A spokesperson for the regulator said it had concerns this would act as a false assurance to those executing transfers, who should still be executing due diligence on the receiving scheme.

“We also have concerns that those running these schemes can simply set up new schemes with different names, making the watch list ineffective,” the spokesperson said. “We will not be pursuing this option.”