Ben Fairhead of Pinsent Masons, the law firm behind Out-Law.com, was commenting as the partner agencies released new data on the common types of pension scam. Victims lost an average of £91,000 each to fraudsters in 2017 and reported receiving cold calls, offers of free pension reviews and promises that they would get high rates of return, according to the data.
Project Bloom partners include government departments, agencies, regulators, law enforcement bodies and representatives of the pensions agency. They are currently carrying out a number of criminal investigations into organised frauds involving members of the same family, who in some cases hired rogue financial experts with specialist pension knowledge to help them run large-scale scams.
Pension providers have also been identifying more suspicious transfer requests than ever before, and alerting scheme members to what they believe could be scams, according to the Pensions Scams Industry Group (PSIG). The group, which also contributes to Project Bloom, produced a new code of practice for trustees, providers and administrators in 2018 to help them with their due diligence on member requests to transfer savings to another pension scheme.
Fairhead, who is a member of the PSIG, said that this week was the sixth anniversary of the launch by The Pensions Regulator (TPR) of its 'scorpion' campaign - the first large-scale pension scams awareness-raising campaign.
"The key to this remains publicity and coordinated and consistent messaging," he said.
"The cold calling ban has probably not deterred too many fraudsters, and too many individuals are still being lured into pension scams. It is also questionable whether the fact many scams involve 'fraudster families' will serve as an identifiable red flag - it is certainly true, but not necessarily obvious at the transfer stage. However, more to the point, it is an eye-catching and original concept when it comes to reporting on pension scams, and it has grabbed some press attention - and, in so doing, hopefully alerted more members of the public to the risks of pension scams as well as perhaps some within the industry," he said.
"This also reflects an encouraging amount of collaboration between the government, TPR and the PSIG in highlighting the ongoing risks. PSIG's Code of Good Practice, in particular, is receiving increased attention. The code is not legally binding, and not a substitute for legal advice in more difficult situations. It does, however, reflect a more contemporaneous view of the sort of due diligence that should be undertaken by trustees and pension providers when faced with a possible pension scam. As we move forward, I would anticipate seeing it referred to as a key point of reference in more and more Pensions Ombudsman determinations," he said.
The current PSIG code of practice, which updated the original 2015 code, was published in June 2018. The code takes account of the landmark 2016 Hughes v Royal London case, in which the High Court ruled that a scheme member had the right to a statutory transfer even in the absence of an employment link with the receiving scheme employer, as well as other legal and technological changes. The Hughes v Royal London case remains the current legal position, although the government intends to legislate to require a genuine employment link with the receiving scheme.
A ban on 'cold calls', emails and other unsolicited communications about pensions came into force on 9 January 2019. The ban will be enforced by the Information Commissioner's Office (ICO), which has the power to issue fines of up to £500,000 for breaches. The ICO is also a Project Bloom partner agency.