With the Government’s consultation on how pension scams could be tackled[1] only recently closed, the Pensions Regulator (tPR) has weighed in to the debate on the measures that could be introduced to protect pensions from fraudsters. In his recent blog [2], Andrew Warwick-Thompson Executive Director for Regulatory Policy at tPR has named his three top measurers for foiling the scammers. These are:

  1. banning telephone cold-calling and extending this to include texts and emails too;
  2. a safe schemes list which would include authorised master trusts and Financial Conduct Authority (FCA) regulated products such as group personal pensions, section 32 policies and self-invested personal pensions (SIPPs); and
  3. banning transfers to small self-administered schemes (SSASs).

Government consultation

In its consultation, the Government looked at three similar areas which were:

  1. banning cold calling and whether this should be extended to all forms of electronic communication;
  2. limiting the statutory right to transfer so that only transfers to the following arrangements could occur:
  3. a) a personal pension scheme operated by an FCA authorised entity, or
  4. b) an occupational pension scheme that is an authorised master trust; or
  5. c) an occupational scheme where there is a genuine employment that can be demonstrated; and
  6. requiring new scheme registrations to be made through an active company albeit the Government also asked whether further action should be taken to prevent SSASs being used for pension scams.

Do the measures solve the problem?

Not surprisingly, the above measures give rise to their own issues such as how effective would a cold-calling ban be, particularly where the scammers are operating outside of the UK, and whether requiring new scheme registrations to be made by active companies would really stop scam schemes from being set up. Unfortunately, the scammers can be sophisticated organisations who could no doubt find ways round the proposed measures. That being said, anything that makes their lives more difficult is no bad thing. The question is whether the disruption these measures might cause to perfectly legitimate transactions, could outweigh the inconvenience caused to scammers.

No doubt the measure that trustees and administrators will be watching most closely is that relating to statutory transfers and for the many reputable and legitimate SSAS providers there will be concerns about a possible ban on transfers to such arrangements. It does seem rather unfair that genuine SSAS arrangements are being tarred as a result of scam arrangements. Perhaps instead measures should be taken to tighten up the rules regarding SSASs, which have been relaxed over the years including making them FCA regulated as SIPPs are or reintroducing the requirement for a pensioneer trustee.

The above certainly begs the question as to why HMRC and tPR are unable to police scam arrangements in the same way that the FCA does. Whilst a lack of resources may be the obvious answer, if trustees are fairly easily able to spot scam arrangements why can’t tPR and HMRC.

Perhaps the answer does rest with the trustees having the ultimate power of veto whether they like it or not or the ability to refer suspect transfers to tPR so that it makes the final call. That being said, if despite all the warnings from trustees, tPR and HMRC someone really wants to transfer you can’t legislate for members making bad decisions.

For further information, please contact:

Kate Lloyd, Partner, Pensions

T: 0121 234 0207 

E: Kate.Lloyd@gateleyplc.com

[1] Pension scams: consultation published 5 December 2016

[2] Helping trustees stop scams – why we need a ‘safe scheme list’ and a SSAS transfer ban

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.