TPR calls on industry in pledge to combat pension scams

The Pensions Regulator (TPR) has launched an industry-wide campaign to combat pension scams, calling on trustees, providers and administrators to pledge to do what they can to protect scheme members.

Supported by the Pension Scams Industry Group (PSIG), the campaign requires six commitments from pledgees, including following the principles of the PSIG Code of Good Practice and considering joining the Pension Scams Industry Forum.

Industry organisations will also need to commit to regularly warning members about pension scams, encouraging members seeking cash drawdown to get impartial guidance, and to report concerns about a suspected scam to authorities.

In addition to this, they will need to take appropriate due diligence on pension transfers and clearly warn members if they insist on high-risk transfer being paid.

TPR encouraged the pensions industry to educate themselves on emerging scam tactics, with those making the pledge expected to commit to educating themselves through FCA resources, as well as completing the scams module in the trustee toolkit.

Commenting on the launch, TPR executive director of frontline regulation, Nicola Parish, stressed that pension scams "devastate lives", highlighting trustees and pension providers as the "first line of defence for savers".

“Scammers are targeting pension pots big and small and so I call on the industry to do its bit and make the pensions pledge to help prevent people losing a lifetime of savings," she said.

The regulator clarified that the pledge sets out the minimum steps that the industry can take to protect scheme members, noting that businesses can do more to help members by using the PSIG code.

PSIG chair, Margaret Snowdon, added: “The pensions industry has a duty to protect its members from the devastating impact of scammers.

“The pledge to combat pension scams is a great step in raising standards in anti-scam practice.

"It seeks to make the industry more accountable for pension scams and encourages confidence in implementing the practices set out in the PSIG code that will lead to greater protection for members.

“I ask the industry to support the pledge and take action to raise awareness of the risks of scams, educate yourselves about evolving tactics and protect members through appropriate due diligence measures.”

The campaign has also been supported by the Pensions Minister, Guy Opperman, who highlighted the initiative as a chance for industry leaders to "step up" ahead of the legislative protections outlined in the Pension Schemes Bill.

He stated: "With the new measures in the Pension Schemes Bill and this coordinated approach, I am confident that we can stop the callous crooks who rob people of their retirement savings.

"I would encourage all pension providers, trustees and administrators to pledge their commitment to this campaign and help do their bit to crack down on pension scams."

Industry organisations are able to self-certify meeting the six pledge steps, although TPR emphasised that if businesses are communicating this achievement with scheme members, it is important that they are transparent and clear in explaining that it is a self-certification process.

The launch comes amid the news that the government intends to consult on all regulations covering pension scam ‘red flags’ after the Pension Schemes Bill receives Royal Assent.

It also follows a new high for pension scam red flags in the XPS Transfer Watch in September, with the latest XPS data showing that 6 in 10 cases reviewed in October 2020 raised concerns.

Commenting on the TPR campaign, XPS head of XPS member engagement hub, Colin Miller, said that the initiative would a "major step forward" in the fight against scams.

He stated: "We have been tracking this activity through our Scam Protection Service for over five years and nearly two–thirds of all transfers are now raising red flags, a sign of potential scam activity.

“The only way to minimise the opportunities for scammers is for trustees to communicate directly with transferring members. Paper checks are no substitute for talking to your members and the pledge recognises this.”

XPS member engagement hub client lead, Helen Cavanagh, added: “It will be important for trustees to work through the regulator’s checklist and confirm their advisers, administrators and the scheme have the necessary processes in place to meet the pledge.

"We hope that this becomes a reference point for good practice and will be watching with interest to see whether the ombudsman uses the pledge in future cases.

“The regulator expects stringent processes to be put in place and if carefully designed and managed once implemented can make a substantial difference in protecting members.

"This is really good news for scheme members, who will be more protected as a result.”

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