A pensions industry body has identified qualified recognised overseas schemes (Qrops) as the main source of pension scams and is updating its code of practice to reflect this.
The Pension Liberation Industry Group (PLIG) launched a code of practice to deal with pension scams three years ago, and is now working on an updated version of this document, to be launched this spring.
Speaking at the Pensions Administration Standards Association (Pasa) conference on 13 February, Ben Fairhead, a partner at law firm Pinsent Masons and member of PLIG, said fraudsters are using the "traditional big scam occupational scheme" less and are now focusing on international self-invested personal pension (Sipp) schemes and Qrops.
He said: "For Qrops, we have a particular section on due diligence around this, which we didn't have in the previous code. This is a recognition that there is a lot of suspicion around some the Qrops that are out there.
"More can be done to raise awareness of the risks of taking your pension money out and putting into some suspect investment."
Darren Cooke, a chartered financial planner at Derbyshire-based Red Circle Financial Planning, who launched a petition to the government to ban cold calling, argued that it isn’t new that Qrops have been "a favourite" of pension scammers.
He said: "The new Qrops legislation that was introduced in the budget [last year] has reduced it a bit. So on some extent they are a little behind the curve, I actually think scammers are switching back to using Sipps and [small self-administered schemes] Ssas' again."
Following Philip Hammond’s last spring budget, from March 2017, all Qrops transfers are subject to a 25 per cent charge, with some exemptions such as if the scheme is based in the same country as the retiring individual.
Mr Cooke welcomed the update on the code, but said that the only solution to end pension scams is that the Financial Conduct Authority (FCA) starts regulating the product and not only financial advisers.
He said: "As soon as the FCA [starts] regulating the product, it would stop regulated adviser recommending unregulated products. That would stop 99 per cent of scams."
Paul Gibson, managing director of Granite Financial Planning, said greater due diligence of Qrops and International Sipps was "long overdue".
He said: "I am not sure a code of practice alone will help and there needs to be greater action taken by regulators to prevent wider abuse.
"There is the wider issue of offshore advice in general and I personally have never seen any examples of good practice at all. The offshore industry does seem to be attract the wrong type of people and rewards the wrong behaviours."