Out-Law News 2 min. read
12 Sep 2017, 2:50 pm
A number of suspected scam websites that have been referred to the regulator carry prominent anti-scam messaging and warning messages which imply that they are legitimate investment vehicles, according to a statement from The Pensions Regulator.
The Department for Work and Pensions (DWP) recently confirmed that it would legislate for a ban on unsolicited calls, texts and emails relating to pensions; as well as new restrictions on the statutory right to transfer pension savings. However, the legislation is unlikely to be in force before 2018 given restrictions on parliamentary time, while the restrictions on pension transfers will not be fully rolled out until 2019, according to its recent announcement.
Pension scammers unlawfully accessed almost £5 million worth of pension savings in the first five months of 2017, while an estimated £43m has been unlawfully obtained by scammers since April 2014, according to the latest figures from the DWP. Targeted individuals lost an average of nearly £15,000 each, the DWP has said.
Ben Fairhead, a pension scams expert at Pinsent Masons, the law firm behind Out-Law.com, said that the new warning "underscores the need for the government to try to stay one step ahead" of scammers.
"It is not entirely clear whether these are targeting transfers of pension funds into other schemes, or individuals over 55 looking to access funds through the Freedom and Choice regime," he said. "However, the fact that the regulator has felt moved to make an announcement suggests these sites are a real concern, and it also hints at an evolution of approach by pension scammers as many in the pensions industry have been anticipating. Before the ban on cold calling has even been implemented, perhaps we are seeing scammers focus on producing more enticing and convincing websites."
"All that those in the industry can do is remain vigilant in identifying risks and warning signs for individuals potentially enticed by these suspicious websites. Due diligence processes will need to evolve slightly too, to take account of developments, but this risks becoming more of a minefield for providers and trustees as the scams become harder to spot. Gone are the days of more obvious references to cash being released. Hands remain tied to a great extent though by the current state of the law if individuals, notwithstanding warnings, are intent upon moving their pension funds into suspect investments or schemes," he said.
Current legislation gives pension schemes limited scope to refuse a statutory transfer request to a scheme which looks like a scam. The government has announced its intention to limit the schemes into which pension scheme members have an automatic right to transfer to those operated by companies authorised by the Financial Conduct Authority (FCA), to authorised master trust schemes, and to schemes where a genuine employment link to a receiving occupational pension scheme exists. It intends to bring the change into force in line with the planned new authorisation regime for master trusts.
The government's plans to tackle pension scams also include a ban on unsolicited calls, emails and text messages about pensions, to be enforced by the Information Commissioners Office; and tougher registration requirements for single-member occupational pension schemes.
The Pensions Regulator said it was concerned that scam websites were targeting the vulnerable and those with legitimate pension knowledge, while dressing them up as being "beyond reproach". Some sites make reference to the tax implications of accessing your pension before the age of 55 and the dangers of cold callers, while others carry material and branding relating to the cross-agency Project Bloom anti-scam campaign without regulator consent.
The regulator, said that it would force websites to immediately cease using proprietary material in response to cases of mis-use. It would also "investigate with other agencies whether further action, such as legal proceedings, should be launched", she said.