The Pensions Advisory Service (TPAS) has set up a dedicate scam line for Phoenix Life as a last resort to try to stop clients from moving their defined contribution (DC) pensions into potentially fraudulent investments.
The guidance body wants to roll-out this service to all providers and schemes, Michelle Cracknell, chief executive of TPAS, told FTAdviser.
A Phoenix Life spokesperson said that “some policyholders want to go ahead with a transfer” regardless of the warnings the company provides.
The spokesperson said: “We recognised that an independent voice such as TPAS might help strengthen our message.
“TPAS offered their support by setting up a specific phone line for these 'insistent' customers to contact where these messages were reiterated.”
Ms Cracknell revealed that the guidance body started two pilot projects with two providers trying to address “legal” scams.
However, she declined to disclose the name of the second provider.
Both projects stemmed from the companies acknowledging that the customer may not accept that the delays in switching out of a pension are for good reasons, she argued.
She said: “We are increasingly hearing that customers are being ‘groomed’ by scammers to expect to hear from the provider that ‘the transfer is taking some time as we are doing due diligence’.
Where the customer hears the provider saying this, it almost validates the scammer. The providers are asking the customers to speak to us as an independent body that has no vested interest.”
Ms Cracknell argued that scammers are setting up legal schemes, which will then make fraudulent investments.
She said: “The fact that more scams are legal means that the provider will have to make the transfer, so the hope is that if the customer speaks to us they will see the dangers and ask to stop the transfer.”
According to the Phoenix Life spokesperson, it is still early days of this project, as it started in July.
However, the provider has “already started to see some success with policyholders changing their mind about going ahead with a transaction,” she said.
The company will refer insistent clients to the scams line, in which they will get tailored messages, the spokesperson said.
The majority of these calls will be regarding a switch between defined contribution, rather than defined benefit, plans, as Phoenix Life's book of pension schemes, which are all closed to new members, are mainly in this market.
Phoenix also receives reports on these calls from TPAS.
The guidance body will give specific customer details, but it will provide information on the issues discussed and the outcome of the conversation with the policyholder, the spokesperson concluded.
Darren Cooke, chartered financial planner at West Yorkshire-based Red Circle Financial Planning, agrees that this scam line is a good measure to stop fraud.
He said: “Anything that helps to raise public awareness of scams and puts people in their guard is to be welcomed.
“If this hotline stops one in 10 scams, great. There is no magic bullet to stop pension scams, it will always have to be dealt with through a series of measures.”