The regulator said it had concerns that pension scheme members were being contacted and persuaded to transfer their savings into poorly-run schemes in exchange for upfront cash incentives and the promise of high investment returns. While cold calling is not yet illegal, the government indicated last week that it would speed up the introduction of a planned ban as part of a crackdown on pension scams.
Pensions expert Ben Fairhead of Pinsent Masons, the law firm behind Out-Law.com, said that it was good to see "proactive" action from the regulator on suspected pension scams. However, he warned that there was often little that could be done once scammers had succeeded in enticing savers to switch to an illegitimate pension scheme.
"The fundamental message to take away is a need for greater public awareness to discourage individuals from transferring their pension funds into scams in the first place," he said.
"It is taking a long while to bring in a cold calling ban but, pending one being implemented, the message needs to be rammed home that an approach initiated by a cold call or the offer of a 'free pension review' is very likely not going to end well. A proper advertising campaign or soap opera storyline would be a good way of aiding that," he said.
Fairhead said that it was concerning that schemes of the type targeted by TPR were "apparently still being set up and presumably registered by HMRC despite the powers afforded to it in 2014 to prevent registration where there were concerns about the real purpose of a prospective pension scheme".
"This suggests that, whilst there has without question been a reduction in the number of schemes being registered, some suspect schemes are still slipping through the net," he said.
The government indicated last week that it would speed up the introduction of its planned ban on cold calls relating to pensions by way of an amendment to the Financial Guidance and Claims Bill, which is currently before parliament, and related regulations. However, it has not yet confirmed when the ban will come into force.
The government announced its intention to ban pensions cold calling in August 2017, along with new restrictions on the statutory right to transfer pension savings. It intends to limit the statutory right to transfer to those schemes which are 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, although this change will be held back to coincide with the introduction of the planned new authorisation regime for master trusts.
TPR, working with the North East Regional Special Operations Unit (NERSOU), searched four homes and businesses in the region as part of the joint operation. One man and one woman were interviewed by the police under caution on suspicion of Fraud Act offences, while a second man was arrested and questioned by the police on suspicion of fraud. TPR also inspected another business in the north east in connection with the investigation, before serving a Pensions Act section 72 notice requiring that business to supply it with additional information.
As part of the same investigation, the regulator has also appointed an independent trustee to run the Alderley Wealth Management pension scheme in response to concerns that the existing trustee had breached its statutory, regulatory and common law investment duties. There is evidence that funds were placed in high-risk and illiquid investments overseas, despite requests from some members that their funds be invested in low-risk UK-based investments, according to the regulator.