‘Take the pledge’: Regulator urges united front on pension scams

Holly Roach and Jenna Brown report

The Pensions Regulator (TPR) has launched a pledge initiative to encourage everyone involved in the retirement industry to publically commit to combat scams.

The initiative – launched on 10 November with support from the Pension Scams Industry Group (PSIG) – encourages providers, advisers and pension scheme trustees to support a pledge to take all possible action to reduce and protect members from scams, and includes clear guidance around appropriate due diligence and best practice.

The watchdog is calling on the industry to publicly pledge their support for the initiative.  According to Action Fraud, more than £30m has been lost to pension scammers since 2017.

TPR executive director of frontline regulation Nicola Parish said: “Pension scams devastate lives. As the first line of defence for savers, trustees and pension providers have a vital role to play in beating the people behind these despicable crimes.

“Scammers are targeting pension pots big and small and so I call on the industry to do its bit and make the pledge to help prevent people losing a lifetime of savings.”

Pensions and financial inclusion minister Guy Opperman added: “With the new measures in the pension schemes bill and this co-ordinated approach, I am confident that we can stop the callous crooks who rob people of their retirement savings.

“I would encourage all pension providers, trustees and administrators to pledge their commitment to this campaign and help do their bit to crack down on pension scams.”

XPS Pensions offered support for the initiative after revealing there has been a significant increase in signs that members could fall victim to a scammer during the Covid-19 pandemic, with 60% of cases reviewed in October 2020 raising concerns.

XPS head of member engagement hub Colin Miller said: “This initiative is a major step forward in the fight against pension scams. We have been tracking this activity through our Scam Protection Service for over five years and nearly two-thirds of all transfers are now raising red flags, a sign of potential scam activity.

“The only way to minimise the opportunities for scammers is for trustees to communicate directly with transferring members. Paper checks are no substitute for talking to your members and the pledge recognises this.”

Duty to protect

PSIG chair Margaret Snowdon said: “The pensions industry has a duty to protect its members from the devastating impact of scammers.

“The pledge to combat pension scams is a great step in raising standards in anti-scam practice. It seeks to make the industry more accountable for pension scams and encourages confidence in implementing the practices set out in the PSIG code that will lead to greater protection for members.

“I ask the industry to support the pledge and take action to raise awareness of the risks of scams, educate yourselves about evolving tactics and protect members through appropriate due diligence measures.”

Financial Conduct Authority executive director of enforcement and market oversight Mark Steward added: “Pension scammers can destroy a lifetime of saving for a comfortable retirement, so preventing scammers succeeding in the first place is the way to go.

“Pension trustees and providers can play their part in helping savers to be ScamSmart by signing up to the pension scam pledge, ensuring they know the warning signs of a customer who’s being scammed, and carrying out appropriate due diligence on pension transfer requests.”

Take the pledge

People who make the pledge to combat pension scams will agree to:

  1. Regularly warn members of the risk of scams.
  2. Encourage those requesting cash drawdown to call The Pensions Advisory Service for free, impartial guidance.
  3. Learn the warning signs of a scam and best practice for transfers.
  4. Take appropriate due diligence measures and document pension transfer procedures.
  5. Clearly communicate concerns to members if high-risk transfers must be made.
  6. Report concerns about a scam to the authorities and communicate this to the scheme member.

Trustees, advisers and providers can sign up to the pledge through the TPR website.