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.”
She noted there were exceptions in the Data Protection Act 2018, which could be applied in this case, such as a member state being allowed to grant exemptions to secure individual rights and national security.
The act also provides for partial exemptions, which “apply to organisations that work in whole range of sectors, including crime and taxation, certain regulatory functions, and archiving in the public interest”, she added.
PSIG’s initiative has been branded as an important step in combating pension scams, and was welcomed by the Pensions Regulator.
A TPR spokesperson said: “We support PSIG’s initiative to establish better information sharing within the pensions industry in order to develop improved knowledge on pension scams.
“Action by everyone involved in the pensions industry, including pension savers, will help stamp out pension scams and end the devastation they cause.”
David Everett, partner at consultancy LCP, said previous blacklisting and whitelisting initiatives have never received the necessary blessing from the watchdog.
He said: “This time it seems to be different. Depending on what is actually delivered, this could be an important step in bringing pension scams under control.
“But more needs to be done – such as through allowing schemes to block transfer requests where they have clear concerns about the destination scheme.”
Sean Browes, a professional trustee at Dalriada Trustees, said knowledge is power when it comes to combatting pension scams.
“Scams are constantly evolving and so real-time information on potentially suspect schemes and investment, which is easy to access and search, would be a valuable tool in the fight against scammers,” he said.
On the other hand, Stephen Scholefield, partner at law firm Pinsent Masons, argued this initiative starts from the wrong end of the spectrum.
He said: “We would have a safer system if we could operate whitelists and refuse to pay transfers to those who did not agree to a form of enhanced regulatory monitoring.
“By their nature, scammers will just keep reinventing themselves, so while this is an interesting idea, it isn’t going to close down the scammers.”
maria.espadinha@ft.com
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