Trustees of pensions schemes could soon be getting more powers to halt suspicious pension transfers, according to the Pension Scams Industry Group.
The group said an amendment restricting the statutory right to a transfer is to be tabled to the pension schemes bill by two MPs, in an attempt to combat pension scams.
It had proposed the amendment in its submission to the Work and Pensions Committee inquiry on pension scams currently underway.
The amendment comes as the Pensions Regulator told the same committee that it would like the power to allow trustees to delay transfers where scam activity is suspected.
Under current rules, if a provider refuses to carry out a transfer they could be at risk of legal action. In 2016, Royal London was successfully taken to court by a scheme member after it identified and blocked a suspicious transfer request.
“Some organisations believe that the statutory right to transfer is so strong that efforts to stop transfers are wasted,” PSIG stated in its submission.
According to PSIG, Labour MP Stephen Timms, chairman of the WPC, and Conservative MP Nigel Mills, also a member of the committee, support the proposed change and will table the amendment to the pension schemes bill, which returns to the House of Commons on Wednesday.
The voluntary body stated the “focus on scams protection must be on preventing monies going to scams and not on recovery after the event”.
It added: “This means trustees and providers must be able to refuse a transfer where there are signs of a scam.
“In many cases (including transfers to self-invested personal pensions), because of the statutory right to transfer, only a legislative change will permit such refusal on suspicion of a scam.”
The Pensions Management Institute and the Association of British Insurers are also supportive of the proposal, according to their respective submissions to the inquiry.
Darren Philp, director of policy and communications at Smart Pension, also agrees with the proposal.
He said: “More can be done to stop scammers in their tracks and make it easier for schemes and providers to help their members.”
Besides suggesting that trustees and providers should be allowed to override the statutory duty to transfer when there are signs of a scam, Mr Philp advised that such measures “would need to be regularly updated to keep up to date with the latest tactics of the scammers, but that could be achieved through secondary legislation”.
Call for transfer extensions
In its response to the select committee inquiry, the regulator stated it would like to see a change in the regulations to help scheme trustees fighting pension transfer scams.
Currently trustees have a legal duty to carry out a transfer of a saver's cash equivalent transfer value within a six-month deadline.
The watchdog believes a “useful addition” to its regulatory toolkit would be the ability to grant trustees extensions to the statutory transfer time period where a scam is suspected.