It is time for government bodies to start making appropriate legislation and funding their regulators sufficiently to help stop consumers losing their savings to pension and investment scammers, says Martin Tilley
Some of you may have come across Angie Brooks and Pension Life, the organisation that aims to do what it can to rescue and prevent pension and investment scams. Above all else though, it helps to raise the awareness of them and any party aiming to do this gets my vote.
Angie has released a book this year – Anatomy of a Pension Scam – in which she highlights a number of the scams that have been uncovered, the people and organisations behind them and the devastation these scams have inflicted on their victims.
Working in the self-invested market, I have seen some of these scams promoted. The perpetrators’ patter will often dismiss any referral of their plan to advisers with the retort: “They will advise you against it as they can’t make any commission out of it”. The book is not always a pretty read but if a prospective client will not take your word, perhaps showing them some of this book might change their mind.
There is, however, one part of the book I have to disagree with. Angie suggests it is hard to decide which is worse – the vicious, greedy, cold-hearted scammers or those that facilitate or fail to prevent the crimes, notably the ceding schemes, the regulators, HMRC and the government.
I have no doubt who is worse. The scammers act with premeditated malice – whilst those ‘facilitators’ can have their hands tied by legislation, be under-resourced or overburdened, be too slow to react and, in some cases, just do not understand the problem.
None of which is to suggest it is not high time these people stepped up their act. We have already seen some action recently and are awaiting the outcome of a Department for Work and Pensions/HM Treasury consultation from December last year, which seeks – among other plans – to ban cold-calling in relation to pension reviews, limit the statutory right to transfers and make registering new schemes harder.
In the world of small self-administered schemes (SSASs), HMRC has put in place a far more rigid acceptance process for new schemes, weeding out schemes for dormant employers or new single members and asking for details of any parties associated with the promotion of the scheme or its proposed investment.
Sadly these checks have been missing since 2006 when the HMRC approval of schemes moved from a discretionary approach to near automatic registration.
The Pensions Regulator (TPR) has also announced in its Corporate Plan 2017-2020 that it will become a “bolder and more effective regulator. Intervening more frequently and acting faster in order to meet its statutory objectives”. It has set out eight clear priorities it will work towards.
Roundly criticised
Some positive announcement was certainly required after TPR was roundly criticised when one of its executive directors wrote a blog suggesting banning SSAS schemes altogether. In the view of the industry, this amounted to an admission the party held responsible for their regulation was not capable of doing so.
I do have some sympathy for TPR. It does not have the resources necessary to fulfil its statutory objectives, but its failing is admitting this and reporting back to government it is aware of problems about which it can do little or nothing. Yes, it banned two individuals last month in relation to the 5G Futures Pension Scheme but this action commenced more than five years ago and the related fraud nearly five years before that.
Brooks’s book features several other examples of whistleblowing going unheeded and scams being allowed to continue when there are clear signs for all to see. While the recent consultation proposes plans to combat future scams, the proposals are already in the open and scammers are contriving work-arounds.
Instead of government bodies focusing on the minutiae of clear and transparent breakdown of charges on regulated arrangements – which might, on balance, stop a consumer losing 1% of their retirement fund – should they not make appropriate legislation and fund their regulators sufficiently to stop some consumers losing it all?
Martin Tilley is director of technical services at Dentons Pension Management
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