Snowdon renews warning on pension scams

Snowdon renews warning on pension scams

There are no signs that pension scams are decreasing, despite a recent report showing that the number of reports made to the police dropped by 81 per cent over five years, an expert has warned.

A Freedom of Information request by AJ Bell to the National Fraud Intelligence Bureau, published earlier this month, showed the number of pension scams reported to the police continued to decline each year with 1,828 complaints received in 2013, compared with 345 in 2018.

In contrast, the number of investment fraud reports has increased by 36 per cent to 9,398 in 2018.

But Margaret Snowdon, chairwoman of the Pension Scams Industry Group, told FTAdviser it was “quite wrong to assume that pension scams are declining from this one narrow view”.

She said: “I have said several times that investment scams are increasing, so it’s right to highlight the issue, but wrong to say that pension scams are over.

“We know from work with practitioners that, at best, one in 20 transfers show signs of a scam, so the problem is not going away.

“It is true that few pension scams are reported but that’s because people do not report to Action Fraud because they see no advantage, and it is actually quite difficult to do so.”

The Pension Scams Industry Group, formerly the Pensions Liberation Industry Group, is a voluntary board made up of representatives from trade and consumer bodies, administrators, trustees, industry bodies, providers, legal and technical experts.

In June, the industry group updated its voluntary code of practice to include regulatory changes and emerging scams which have impacted the industry over the past year.

Ms Snowdon said she was very concerned that the data revealed in the FOI “might undo some of our good work in getting schemes and providers to carry out due diligence to protect members against pension scams”. 

She said: “I hope we don’t find schemes deciding that it is no longer necessary to incur the costs of due diligence in the mistaken belief that pension scams are a thing of the past.”

The Pensions Regulator and the Financial Conduct Authority have warned that more than 5m pension savers (42 per cent) were likely to fall for at least one of six tactics used by pension scammers, with the financially savvy just as likely to be fooled.

People who are actively seeking ways to boost their retirement income are even more likely to fall for scammers’ tricks, with 60 per cent likely to be tricked.

Last year, 180 people reported to Action Fraud that they had been the victim of a pension scam, losing on average of £82,000 each, the regulators said.

Scammers using exotic investment opportunities and cold calls were seen to have been more likely to persuade savers to give away details about their pensions than others.

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