Regulator to Block Transfer if Scam Suspected

A recent study from provider The People’s Pension and think tank the Police Foundation has reported an increase in pension fraud since Covid-19 started.

Several proposals have been recommended in a new report including Pension regulators being allowed to override the statutory (legal) right to a pension transfer should a suspected scam be reported to them.

Recently, a fraudster that swindled a charity’s pension scheme out of more than £250,000 has been ordered by the Pensions Regulator to repay the same or face an even larger prison sentence.

Last year almost 1,000 customers from 13 pension providers with combined savings of £54 million were scammed.

Potentially a loss of £31 million as 62% of the customers insisted the transfer continued regardless of the risk.

In order to protect pension savers, the report asks the government to give powers to pension companies to alert the regulator of suspicious activities.

The government should also ensure pension fraud victims are not hit with tax penalties as they currently are.

Comment

This is dangerous ground.  The FCA should be given powers to block scams but it is providers and advisers that have a duty to check that the scheme having the pension transfer paid to is verified by HMRC.  This is not 'rocket science'.  All pension schemes are aapproved by HMRC.  There is an HMRC pension register.  If pension providers supplied exact bank details for each pension scheme than a check could easily be made, in a secure manner, to verify that the scheme accepting the transfer is legitimate and the bank account where the transfer is being paid to is also legitimate.

'Silver tongued' or pushy 'scam' callers can be convincing or indeed become bullies.  The public needs to be protected and the Financial Conduct Authority along with the Pensions Regulator and HMRC should easily be able to solve this.