The Pensions Regulator has published details of its investigation into a suspected multi-million pound scam case.
The watchdog’s report details how three individual trustees - Alan Barratt, Susan Dalton and Julian Hanson - acting on third party instruction from David Austin, were deemed by the regulator to have misappropriated scheme funds and exercised poor trustee governance.
Mr Austin is described as acting as a shadow trustee in control of the funds paid into a number of pension schemes.
Following its inquiry, the regulator believed it was reasonable to infer that a pension scam had taken place, in which funds totalling around £13.7m belonging to 242 members have all but disappeared; including through the payment of “exorbitant” fees and commission payments.
The case featured mass marketing techniques such as cold calling, highly suspicious activity, including funds transferred from pension schemes to trustee personal bank accounts, and third party companies mostly connected to controlling parties; plus the incentive of lump sum payments on completion of transfers.
The regulator added that members were provided with inadequate scheme documentation at point of transfer, and once entered into a scheme, were unable to easily contact the administrator.
Andrew Warwick-Thompson, executive director responsible for work to disrupt pension scams, said that this should be another reminder of why savers must remain vigilant against the threat of scams, which have a devastating impact on people’s lives.
“Our appointment of an independent trustee has helped secure approximately £400,000 from the schemes, however for many hundreds members, hard-earned savings have most likely been lost.
“Our message is clear: if you’re cold called or texted by people claiming they can help you to get early access to the cash in your pension or unusually high investment returns, stop, don’t be tempted, and put the phone down.”
Despite, or in some cases because of, the recent at-retirement reforms, pension liberation remains a huge problem, with providers telling FTAdviser back in August that they have blocked millions of pounds of transfers to alleged liberators.
Speaking to FTAdviser, Standard Life’s head of pensions strategy Jamie Jenkins warned that there has been a steady increase in pension liberation over the last 18 months.
Over the last few years, Standard Life has blocked a total of 420 cases, totalling £15.1m as at the end of June 2015.
Two years ago, Aviva’s head of policy John Lawson also cautioned that pension liberation was at least a £600m problem and Mr Jenkins believes this is still the case. “People have quoted figures of £500m, which is relatively consistent, but no one is exactly sure of the figure,” he added.
In the first half of this year, Aviva, including Friends Life, declined around 110 transfers, worth more than £3m.
emma.hughes@ft.com
