The sentencing of two former financial advisers, Mark Kelly and Rikki Nicholls, to six years imprisonment for conspiracy to defraud and money laundering highlights the need for trustees to take steps to protect their pension scheme members from fraud, RSM UK has warned.

Since the new transfer regulations for providers to 'flag' pension transfers that could be scams were introduced last November, pensions trustees have had increased responsibility to identify and prevent pensioners losing their funds to fraudulent investments.

In this recent case Kelly and Nicholls were sentenced to six years in prison after convincing over 250 savers to transfer more than £20m of their pensions savings into “wholly unsuitable” investments.

Kelly and Nicholls persuaded a number of victims, predominantly Equitable Life customers, which Nicholls was a former employee of, to transfer their pension into accounts controlled by Kelly.

Affected members’ losses ranged from £10,000 to £200,000, and in some cases, their entire pensions savings were lost.

RSM UK pensions audit director, Elizabeth Storey, commented: “This is a stark reminder that fraudsters will seek to target vulnerable pension scheme members, particularly now, as the cost-of-living rises.

“Some people may see moving their pension funds to somewhere more accessible as an easy solution to their money woes, making them more susceptible to scams.

“The new transfer process requirements that took effect from November 2021 should help prevent similar fraudulent activity from being successful in future, and it’s important for trustees to understand the important role they now play, since this regulation was introduced, to help protect their pension scheme members from the growing risk of fraud.”

As data from Action Fraud has showed £2m has been lost since the start of 2021 due to pension scams, RSM UK has made several recommendations for trustees to follow to protect their members.

The recommendations included ensuring any transfer forms can never be signed by the member as blank forms, checking with the administrators that member data is protected from unauthorised access and confirming that the administrators regularly communicate the risks of scams to their pension scheme members in line with the November 2021 requirements.

Share Story: