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Stephen Timms: Regulators need to be vigilant over scams

Stephen Timms: Regulators need to be vigilant over scams

The Work and Pensions Committee, chaired by Stephen Timms, is now well into its inquiry on the impact of pensions freedoms five years on.

While the increasing number of pension scams has been exacerbated by coronavirus, the industry has been critical of the regulators playing catch-up and the growing bills being levied upon advisers.

But the mild-mannered Mr Timms says he will reserve judgement on how the industry’s regulators have performed until after the review.

“The British Steel case was absolutely dreadful and is one of the reasons it is so important to be doing this work now on pension scams,” Mr Timms says.

“There are more scams emerging the whole time, and all the regulators need to be vigilant to protect us. I welcome the publicity campaign the Financial Conduct Authority has been promoting recently specifically on scams.

“Let’s see what conclusions we draw from our inquiry. I’ve no doubt once we have completed phase one on scams we will have something to say about the way the regulators have been behaving.”

Scams

The scale of the problem is the reason why pension scams make up the first phase.

Since 2017, £30.9m has been reportedly lost to pension scammers, according to complaints filed with Action Fraud.

And in a hearing in March 2020 the then head of the FCA, Andrew Bailey, told MPs on the Treasury Committee he thought the pension freedoms had been introduced too quickly, adding the regulatory system has been in a “catch-up process” since.

Mr Timms says: “With Covid-19, the opportunity for scamming is probably greater than ever and the dangers here are very big. I think it is important that the department responds to a lot of calls that have come from all sorts of places for us to do some work on this.”

Guidance

The second phase of the WPC’s review will look at the choices people make when they access their pensions, as there are concerns over the low take-up of government guidance services.

“The pension freedoms were launched alongside a guidance guarantee. Pension Wise was set up to provide free guidance for those accessing their defined contribution pensions,” Mr Timms says.

“The people who use Pension Wise seemed pretty pleased and gave it positive feedback, but there were not many of them.

“There have been recent trials by The Money and Pensions Service showing that you can nudge people and that does increase take-up, but there are still lots of people who opt out of receiving free guidance, so I think there is some issue there we need to look at.”

The third part of the review will focus on how people plan to save the amount they need for retirement.