Lack of pension freedom safeguards has been 'life-ruining'

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The war against pension scams and investment fraud needs a coherent, joined-up approach between regulators, the industry and the police - and government should be leading the charge, a senior politician has said.

Speaking on the FTAdviser In Focus Fireside Chat, Stephen Timms, chairman of the Work and Pensions Committee, said the government had failed to put in any safeguards in legislation when the pensions freedom regime came into force in 2015. 

As a result, he said it was clear that "life-ruining" scams have been perpetrated, with pension fraud showing an alarming rise in the UK and not enough was being done to tackle it. 

He applauded the various measures being taken by different organisations - such as the Project Bloom taskforce and the Financial Conduct Authority's hard-hitting advertising - but said all these efforts were so disparate and disconnected that the effectiveness was diminished.

Mr Timms called for joined-up thinking and effective collaboration, led by government action to incorporate legislation to tackle financial harms head-on.

He says: "We have this situation where there is a curious fragmentation of various bodies. We have Action Fraud, the FCA, TPR, the Pensions Ombudsman, the Fos, the police – everything is so fragmented.

"And therefore people aren't quite sure who to report to, so co-ordinating the enforcement and policing resources around this is one of the things that has to happen."

He states the WPC will continue to do more to make sure the industry plays its part, too. The committee is currently finalising the first part of its tripartite inquiry into the pension freedoms - five years on. 

The first part of the inquiry, which began in 2020, has focused primarily on pension scams and what is being done to protect consumers. 

His comments come as Action Fraud published its latest figures on victims of cloning scams, which revealed that Britons lost £45,000 on average last year to cloning fraud.

Altogether, Action Fraud said £78m had been reported as stolen out of people's pensions and investments by thieves pretending to be genuine companies.

For the full fireside chat, watch the video above.

There is also an in-depth investigation on Pension Scams from FTAdviser In Focus, which qualifies for an estimated 40 minutes' worth of structured CPD. The CPD report can be accessed here.

Simoney Kyriakou is senior editor for FTAdviser