PLSA AC 2020: Fragmentation of responsibility 'significant' part of pension scams problem - Timms

Fragmentation of responsibility between regulatory bodies on pension scams work has been highlighted as a “significant” part of the problem by Work and Pensions Committee (WPC) chair, Stephen Timms.

Speaking at the Pensions and Lifetime Savings Association (PLSA) Annual Conference 2020, Timms explained that the WPC inquiry had heard “lots of worries” around the effectiveness of action fraud in this area in particular, with many respondents calling it “inaction fraud”.

Citing a previous investigation by The Times from August 2019, Timms emphasised that out of a half a million reports to Action Fraud in this area, half are classified as information reports.

This is despite a review of around 100,000 of these reports in 2018, which found that almost a third of such information reports merited a police investigation, whilst a further quarter of this subset were subsequently solved by police action.

Timms stated: “It is very worrying that so many of the issues referred to Action Fraud could be resolved by the police are not in fact actioned at all.

“Action fraud has a very important role, but so does The Pensions Regulator, The Pensions Ombudsman, the Financial Conduct Authority (FCA) and the police.

“All of them are involved, and it does look as though that fragmentation of responsibility in this area is a significant part of the problem that we are facing.”

A recent freedom of information request from Quilter also supported this, revealing that just 6.6 per cent of pension scams were referred to the police for investigation in 2019.

He continued: “This really is a life destroying crime, which is, at the moment, carrying on in an almost a kind of unchecked way. We’ve got to make some significant changes in dealing with it.

“There are lots of different kinds of scam, and I think another one of our problems is the authorities are not always aware of the range of the abuses that are underway because the people who are carrying out these crimes are very ingenious people.

“They’re very well-funded as well, and they are very well placed to keep one step ahead of the rather ponderous and slow, and so far rather ineffective, moves that have been made to deal with the problem.”

Timms also noted that the WPC had been in discussion with the Pensions Minster, Guy Opperman, on a proposed amendment to the Pensions Schemes Bill, which would allow trustees to refuse to make a transfer if it raises red flags against the Pension Scams Industry Group (PSIG) list.

He continued: “I know the minister is keen to see whether the benefits of that amendment can be realised without any further actual change to the bill, but I think it’s going to be difficult to realise those benefits without any further changes to the bill.

“The minister is reluctant to change the bill for reasons that I well understand as a former pensions minister myself, but I think it’s very important that we do make the change that [PSIG] is arguing for."

Indeed, Opperman recently wrote to Timms to outline how each of the red flags identified by PSIG could be addressed under the existing clause 125, which would allow conditions to be applied to the statutory right to transfer.

“Given the infrequency of pension bills, which give us the opportunity to make such changes, I really really want this opportunity to be taken advantage of, and we’ll see whether the minister and government can be persuaded in the course of the next few weeks," Timms continued.

However, this comes as Pensions Minister, Guy Opperman, also speaking at the PLSA conference, has predicted another pensions bill in the current parliament.

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