The UK’s largest pension scheme administrator has warned of “floodgates” being opened for criminals because of a recent High Court ruling.
Equiniti said schemes will now find it difficult to prevent pension transfers to any registered pension scheme - regardless of whether they think it is a potential scam.
Peter Scott, head of pension regulation and compliance at Equiniti Pension Solutions, said: “This decision to overrule the Pension Ombudsman has come as a major blow to pension schemes and their administrators, many of which had restructured their anti-scamming processes in the light of the Pensions Ombudsman’s determination.
“In our view, the High Court’s decision has deprived the industry of a valuable tool in the fight against pension scamming and has further stretched the meaning of an occupational pension scheme.
“Not for the first time, we have to ask ourselves if the only way to bring an effective end to the pension scamming phenomenon is for fundamental changes to be made to the legislation underlying the transfer process.”
Last month a High Court judge ruled in favour of Donna-Marie Hughes’ right to transfer her pension into a new scheme despite her existing provider’s concerns about it.
Ms Hughes contested the decision by complaining to the Pensions Ombudsman who found in favour of Royal London but she has now successfully appealed the decision in the High Court.
The vehicle Ms Hughes was planning to put her £8,359.71 savings in would have allowed her to invest in places such as Cape Verde.
David Trenner, technical director at Glasgow-based Intelligent Pensions, said: “As a trustee it is not about making decisions for a consumer, it is about what a reasonable duty of care is.
“At the end of the day if a consumer wants to do a stupid thing, then providing you have sent out a disclamer then the trustees have done their job as far as I am concerned.”