The increase in the cost of living may leave savers more vulnerable to scammers, the Pensions Regulator has warned, as it unveils a new three-year plan to protect individuals from pension scams.
In its new scams strategy, published on August 3, the watchdog said it will look to continue improving the coordination of intelligence between scam-fighting partners.
TPR is concerned that the temptation of promises, such as early access to a pension or higher investment returns, could lure people in even more than usual given the financial difficulties they are facing. For example, savers who are struggling to pay household bills could be sorely tempted by the promise of getting their pension earlier than usual.
Its three-pronged approach will educate industry and savers on the threat of scams, encourage higher standards and prevent practices that can harm savers’ retirement outcomes, and fight fraud through the prevention, disruption and punishment of criminals.
In the report, Nicola Parish, TPR's executive director of frontline regulation, called on the industry to deliver good outcomes for savers by being proactive in their pension scam warnings, innovative in driving improvements in protection standards and reporting potential crimes to the authorities.
“Now is the time for the industry, regulators, and government to do more and truly work together to put savers at the heart of all that we do,” she said.
“We expect industry to lead the way in thinking of innovative ways to protect savers now and in the future,” she added.
Data-sharing agreements under review
Under its new plan, TPR will review its data-sharing agreements with the Money and Pensions Service and the Financial Conduct Authority, as well as work with MaPS and DWP to analyse the Pension Schemes Act 2021, amber-flag transfer data and develop appropriate policy responses.
It will also work with Pension Scams Action Group partners to review the suitability of scam prevention warnings for savers transferring to self-invested personal pensions and small self-administered schemes.
Margaret Snowdon, chair of the Pension Scams Industry Group, which is part of the PSAG, said she is in full support of TPR’s scams strategy.
PSIG will contribute to PSAG as a partner and will deliver the elements where it is involved, namely on non-legislative practical solutions, awareness, intelligence and victim support, she said, adding: “Working together and sharing what we know is key to defeating pension scammers. TPR gets this and the reshaping of Project Bloom to PSAG is a leap forward. PSIG fought for this and has delivered practical help over the years, and this has been effective.
“Pension transfer scams are now much reduced, but of course, scammers move to other approaches, so the battle never ends.”
More resource is needed for enforcement as is greater coordination of both the government response to scams, and that of the industrySimon Miller, Stop Scams UKUnder the new plan, the watchdog will encourage the industry to use anti-scam messaging on annual benefit statements and other touchpoints. It will continue to support and amplify the messages of the FCA’s ScamSmart campaign, adapting messaging to deal with new and emerging threats.
TPR will also support the implementation of the DWP's Stronger Nudge to guidance regulations.
The regulator will explore how anti-scams messaging could be promoted through employers and continue to encourage the industry to go beyond minimum compliance and engage savers with their pensions. TPR also wants to improve the consumer journey, including a review of guidance on member communications for scam-prevention messaging.
The regulator will consider opening a “regulatory sandbox” to allow industry to test solutions for scam prevention and intelligence gathering in partnership with other relevant regulators.
TPR’s plan noted three main drivers of pension scams, which have evolved from pension liberation into a much wider number of scams.
First, it observed that too many schemes that savers transfer out of have poor governance and administration and are unable to spot the signs.
It also acknowledged that overlapping regulatory jurisdictions means scammers can skirt the regulatory perimeter and avoid detection. It added that in the past, advice payment incentivisation had meant that decisions were not made in savers’ interests.
More resource needed
TPR recently published a guide to reporting pension scams to help schemes report suspected scams to the correct authorities.
Philip Brown, director of policy at B&CE, provider of The People’s Pension, supported TPR’s new strategy, warning that the cost-of-living crisis will “leave many savers more exposed to ‘too-good-to-be-true’ offers”.
Simon Miller, director of policy and communications at Stop Scams UK, said that as the crisis starts to bite, much more is needed to take the fight to the scammers and help keep people safe.
“More resource is needed for enforcement as is greater coordination of both the government response to scams, and that of the industry,” he warned.
Becky O’Connor, head of pensions and savings at Interactive Investor, said it is important to have a better understanding of what a pension scam is, praising TPR’s definition of the ‘seven types of pension scam’.
“It’s vital for an industry that has been no stranger to scandals to clamp down on pension scams — trust in pensions is important if people are going to be able to retire well in years to come,” she added.
Stephanie Baxter is a freelance reporter for Pensions Expert, FTAdviser's sister publication
