Concerns of 'capacity crunch' at Maps as scam rules come into force

Concerns of 'capacity crunch' at Maps as scam rules come into force

Concerns have been raised about MoneyHelper and the Department for Work and Pensions' preparedness for a flurry of enquiries when the new anti-scam rules come into force next week.

A recent Parliamentary answer from pensions minister Guy Opperman has raised concerns in the industry about whether the government has the capacity to handle an increase in queries on the back of new rules designed to protect people who transfer their pensions from scammers.

From the end of November trustees will be able to pause or block pension transfers if they deem necessary, by raising a ‘red flag’.

In addition, they can raise an ‘amber flag’ if they suspect a potential scam, which will mean the member will have to provide evidence they have taken specific scam guidance from the Money and Pensions Service before they are allowed to transfer.

Wendy Chamberlain MP asked what estimate the DWP had made on the number of referrals to MoneyHelper for mandatory guidance once the new rules come into force and whether additional resources have been allocated to MoneyHelper to account for this.

In his answer, submitted last week (November 16), Opperman said accurate data on this will be available after November 30 when the rules come into force.

He said: “It is the Department's intention to monitor the volumes of referrals to MoneyHelper and include this in the review of the regulations I have committed to carry out within 18 months of them coming into force, having worked closely with the Money and Pension Service.”

But Chamberlain said this offered “little reassurance” that preparations have been made by the government.

She said: “A review in 18 months will be of little use if people struggle to transfer their money now because they cannot access an anti-scam interview because of a capacity crunch”.

A DWP spokesperson said: “Our new transfer regulations build on existing due diligence by giving trustees and scheme managers what they have been asking for - the ability to act where they have concerns - and we last consulted on this matter in May, providing over six months to prepare for the changes.

“Any demand they create for new guidance will form part of a formal review in 18 months’ time. Additionally, we do not believe these regulations require additional scrutiny of all transfers, unless the transfer is to an occupational pension scheme or to an overseas scheme.”

Daniel Jacobson, a senior consultant at LCP, said it was unclear how trustees will respond to the rules.

For example, if they opt for an ultra-cautious approach of categorising large numbers of transfers as raising ‘amber flags’ there is a risk that MoneyHelper could be overwhelmed, leading to delays.

Jacobson added: “The new rules have been brought forward with the best of intentions but there has been very little time for schemes to prepare, and volumes of referrals to the new anti-scam interviews are highly uncertain.  

“Unless schemes apply appropriate due diligence, rather than simply deciding to automatically refer most cases to Moneyhelper there is a risk that large volumes of referrals could overwhelm the service and lead to delays and frustration.