Police forces in London, Scotland and Cheshire have collectively arrested seven men following a series of raids on call centres, in connection with an investigation into pension liberation cold-calling operations.
On Wednesday morning (8 May), detectives from the National Lead Force for fraud made three arrests and seized computers and documents following a raid on a City of London office housing up to 40 call centre workers.
Meanwhile, an investigation team supported by Police Scotland arrested two men in Ayr and Glasgow. Two further arrests were made in Cheshire.
All seven men were arrested on suspicion of conspiracy to defraud and money laundering, and have since been released on bail.
The investigation was triggered after the National Fraud Intelligence Bureau identified an increasing number of reports to the Action Fraud hotline of people losing their pensions after being promised “better returns and tax free advances to release their savings”.
The investigation forms part of a wider cross-government multi-agency operation against pension liberation activity.
The government estimates thousands of people have released up to £400m in pension liberation transfers, money that it says is typically placed into “high-risk and often non-existent” investment schemes, many of which are based overseas.
While in many of these cases the practices would constitute fraud, in other cases pension money is simply transferred into an alternative scheme and a portion of it is released, which is not technically illegal.
However, unless the individual is in severe ill health or meets other strict criteria such practices will always incur an unauthorised tax charge of 55 per cent, which can rise to 70 per cent if penalties are applied.
Yesterday (9 May), FTAdviser sister title Financial Adviser reported on activities by providers to strike back against pension liberation schemes.
In particular, Legal and General is seeking an interpretation of the Pension Schemes Act 1993 that would imply a more prescriptive definition of a qualifying pension scheme, giving the industry more scope to refuse or delay transfers.
Steve Head, commander at the City of London Police, said: “Pension liberation fraud is the new boiler room fraud phenomenon as fraudsters seek to exploit new opportunities thrown up by the changing economic climate.
“The promise of maximising returns on your pension savings may seem to make good financial sense, but the reality is you could be falling into a terrible trap which has the potential to destroy your retirement.
“People should think long and hard before releasing pension funds early and anyone who is cold-called or text messaged with this or any other type of investment opportunity should put the phone down and not reply to the message.”
Additional reporting by Ashley Wassall.
