The Work and Pensions Select Committee’s Report on Pension Scams

This event has now taken place but you can watch the video recording of it through our Youtube Channel, get to it by clicking the button below

When

Monday, April 26th from 6pm to 8pm UK time

Where

Online symposium via Zoom.

Format

There'll be a great line-up of speakers plus ample scope for discussion and debate.

Why you should attend

Introduction

This is the first event by the All-Party Parliamentary Group on Pension Scams and it is taking place on Monday, 26th April from 6pm to 8pm, on Zoom. 

All event logistics are being taken care of by the APPG’s Secretariat, the Transparency Task Force.

The event is all about the many excellent recommendations for reform that are in the Work and Pensions Select Committee’s excellent Report on Pension Scams

We know that there’s a big difference between a Select Committee recommending reform and reforms actually happening, so the basic idea of the event is to take the opportunity to discuss and debate the proposed reforms, and to galvanise support to campaign for change, should it be necessary to do so. 

The key speakers so far are Bob Blackman MP and Stephen Timms MP; the former being the APPG’s Chair and the latter being both a member of the APPG and also the Chair of the Work and Pensions Select Committee.

The Committee’s Report calls on the Government to ‘act quickly and decisively’ to protect pension savers, more than five years on from the introduction of the pension freedoms, which have put people at risk of a much wider range of scams and fraud.

The report warns that commonly cited figures of the scale of pension scamming are likely to substantially underestimate the problem, with the situation being likely to be getting worse rather than better, with the covid-19 pandemic offering scammers new opportunities.

The Committee heard throughout its inquiry that pension scammers have moved online, with regulators powerless to hold search engines and social media to account for hosting scam adverts as they do traditional media. Tech firms such as Google are accepting payment to advertise scams and then further payments from regulators to publish warnings – a practice the Committee describes as ‘immoral’.

There are calls for the Government to rethink its decision to exclude financial harms from the forthcoming Online Safety Bill and use it to legislate against online investment fraud.

The report also calls for the multi-agency task force set up to tackle pension fraud to be strengthened.

The existing Project Bloom should be renamed the Pension Scams Centre and given dedicated funding and staffing to manage an intelligence database and law enforcement.

Currently the fragmentation of reporting, investigation and enforcement has made tackling pension scams more difficult.

The Committee’s findings also conclude that the Financial Conduct Authority must ‘raise its game’ and publish information about its enforcement action, with the Committee hearing numerous criticisms that it is not effective in stopping scams, punishing scammers or retrieving scam proceeds.

Overview of the Proposals:

      – Recording and reporting

  • The Pension Scams Industry Group estimates that £10 billion has been lost by 40,000 people to pension scams since 2015. The situation is likely to be getting worse rather than better: scammers in all industries look to take advantage of new situations and covid-19 potentially offered them new opportunities. (p10)
  • The reputation of Action Fraud, the UK’s national centre for fraud and cybercrime, has been left ‘in tatters’ by its failure to manage the expectations of victims and a lack of action on cases. It should have a coordinating role for victims and set up appointments with other bodies for them to receive support . Action Fraud should give guidance and a tool to the pensions industry to allow them to more easily report scams. (p14)

    – Prevention
  • The Committee welcomes the provisions in the Pensions Schemes Act 2021 that will allow people’s statutory right to transfer their pension scheme to be restricted where there is a sign of a pension scam. A review of the system of red and amber flags (to block or pause a transfer) should be published within 18 months of the regulations coming into operation to allow any further legislative changes to be made. (p24)
  • In order to create parity between traditional media, such as TV and newspapers, and new media, including search engines and social networks, paid-for advertising on online platforms should be covered by the regulatory framework for financial promotions. This would require online publishers to ensure that any financial promotion which they communicate has been approved by an authorised person or is exempted from the financial promotions regime. The Government should use the forthcoming Online Safety Bill to legislate against online investment fraud. (p26)

    – Enforcement

  • Project Bloom, the multi-agency task force, should be given a statutory remit, renamed the Pensions Scams Centre, and given dedicated funding and staffing to manage a pensions scams intelligence database alongside law enforcement. (p45)

    Supporting pension scam victims

  • Pension liberation scams, which encourage savers to access their pension before the age of 55, can leave people with large unexpected tax bills. The approach of HMRC in pursuing victims has often lacked empathy and the Treasury should recognise that where a saver has been the victim of a crime and made no financial gain, it may not be in the public interest to demand payment of tax. In future, when people access a defined contribution pension pot before their 55th birthday, the income tax and surcharge due should be paid to HMRC before they receive the balance. (p47)
  • The Committee heard numerous criticisms that the FCA is not effective in stopping scams, punishing scammers or retrieving scam proceeds. There is a compelling case for a much more ambitious approach. The report recommends that the FCA publish a costed plan to raise its game in tackling scams. (p44)
  • Victims of pension scams suffer lifelong financial harm and potential impact on their mental wellbeing. The Department for Work and Pensions should ensure all victims are offered support. (p55)

The full Report can be downloaded here.

Here's the programme and timings so far...

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