Financial services firms need to play a "pivotal role" in stopping scammers stealing clients' money, according to Andrew Warwick-Thompson, executive director at The Pensions Regulator.
Speaking to FTAdviser, he said action taken by financial services providers, pension trustees and administrators at the point of transfer plays "a pivotal role in disrupting pension scams".
His comments come as the vulnerability of those drawing down all of their cash via pension freedoms has been thrown into the spotlight.
Closed book life company Phoenix reported in October last year, it had prevented £26m of pension fraud to date, with almost £2m-worth blocked since pension freedoms were introduced in April 2015.
Earlier this year, consultancy Xafinity found scammers could be behind as many as one in 10 pension transfer requests, and in September industry figures called for tighter regulation of small self-administered schemes in a bid to prevent further activity by scammers.
Speaking to FTAdviser, Mr Warwick-Thompson said there are signs scammers have shifted their focus to investment related scams, "enticing people who have drawn their benefits out of schemes and those who have a pension fund to transfer".
He said financial services professionals are key to the prevention and disruption of such scams.
Mr Warwick-Thompson said: "We want all pension professionals to be aware of threat of pension scams and carry out due diligence when processing transfer requests – and to include our 'scorpion' [warning information] in the next annual statement sent to members, and to anyone who requests a transfer in the meantime.
"Only co-ordinated action by everyone involved in the pensions industry, including pensions savers themselves, will stamp out pension scams."
Government and regulators must work closely with pension professionals to "disrupt and raise awareness" of pension scams, to avoid people's retirement savings falling into the hands of "pension predators", he added.
Key work in this area is being done by Project Bloom, a taskforce which includes TPR, HMRC, the Financial Conduct Authority, the National Crime Agency, Action Fraud, and the Serious Fruad Office, so that the right agency intervenes where appropriate "to pursue and bring scammers to book".
Mike Broomfield, head of intelligence and Project Bloom leader at The Pensions Regulator said the industry needs trustees to help to make members aware of the dangers they face.
TPR has compiled a guide for trustees and other pensions professionals.
"It's got a checklist of what to do if a member is asking for a transfer, and tips on the due diligence you should be thinking about plus some more information about genuine financial advisers and tax registered pension schemes," Mr Broomfield said.
Alistair Wilson, Zurich's head of retail platform strategy, called on the industry to act together.
"Advisers can play their part by checking they have robust controls in place to protect clients from financial crime, and that these measures are up-to-date and in line with current threats. Crucially, when clients want to transfer cash, advisers need to fully understand where the money is being moved to and why."
The rules on unregulated introducers should be tightened, he added, as they are often the link between consumers and bogus investments or pension schemes.
Contractually linking introducers to authorised IFAs or pension schemes would see them required to comply with Financial Conduct Authority rules, Mr Wilson said, and stem the flow of customers to risky schemes.
"We are also pressing for the government to carry out an assessment of the impact of an outright ban on cold calling related to regulated financial products.
"Referral fees between introducers and pension schemes should also be fully disclosed or banned altogether, as they are between claims management companies and solicitors."
Alan Chan, director at IFS Wealth & Pensions said providers have a "very important role to play" as part of the public’s "front line defence against scams".
He wanted providers to actively encourage people to use the FCA’s adviser directory to check if they are dealing with a legitimate firm.
"I think the FCA could do more to educate people about regulated advisers and create more awareness that there are ‘unregulated advisers’ too and they need to be careful when they are approached by them."
Diligent advisers will ask the right questions to identify if their client is subject to a pension scam, he said.
"These situations are rare because the nature of an adviser-client relationship is such that they would normally consult their adviser first before acting on anything they hear or read from somewhere else.
"It’s more likely that a customer who does not already use a regulated financial adviser, or, worse, cannot tell the difference between a regulated and unregulated one, is the victim of a scam."
ruth.gillbe@ft.com
