The Pension Scams Industry Group is working with anti-fraud organisation Cifas to launch a network of open-source information on suspicious companies and pension arrangements, which specialists say could be an important step in bringing scams under control.
The project will allow network members to post concerns about companies and advisers they believe may be acting inappropriately or fraudulently, collecting details on arrangements including names, telephone numbers and addresses.
Not-for-profit Cifas has already completed similar work in the banking sector, collating thousands of cases of bank fraud shared by its members.
By implementing a similar solution for pensions, PSIG hopes the industry will be able to take action against scammers earlier and warn off vulnerable members. The group’s chair, Margaret Snowdon, said: “If one organisation has a concern about a particular firm, they can signal that and others can see that a concern has been logged.”
While the system will stop short of passing judgment on organisations or individuals, schemes will be able to see information that has been considered a ‘red flag’ during due diligence processes conducted by other parties.
“We wouldn’t have a field to say this person is a scammer,” Ms Snowdon explained.
This idea of an information-sharing network is not new, with FTAdviser reporting in February 2018 the intention to create a closed list of pension schemes and advisers that have been flagged as potential scammers, to be shared among trustees and providers.
Ms Snowdon is now looking for funding for the project, which requires a minimum of £60,000 to be operational.
“We’re initially just looking for funding of around £10,000 to cover legal advice around data protection, so it isn’t a big ask,” she added.
However, the operational model of the network has not yet been finalised.
Ms Snowdon explained that the goal is to make the system as easy to use as possible to make due diligence more efficient.
“It wouldn’t help if we made it expensive to participate in it; it may well be that it will be free to use, but it has to be under certain control – we need to make sure that whoever uses it doesn’t publish the information somewhere else.”
One barrier to the network is compliance with the General Data Protection Regulation, to ensure PSIG cannot be challenged legally on the information being held on the platform.
Ms Snowdon said: “We’re taking advice on that, but given that we will be using open source data, we don’t think there will be anything we say that an individual can try to sue us over. They can tell us what we’re holding is inaccurate, but they cannot stop us from holding it if it is factually correct.”
Penny Cogher, partner at law firm Irwin Mitchell, explained: “Cifas operates so that to join you must be a company under a regulated sector [including pensions] and you agree to information sharing, thus making it an exception to GDPR.”