Source · Select Committees · Work and Pensions Committee
Recommendation 13
13
Pension scammers do not confine themselves to the borders of the UK.
Recommendation
Pension scammers do not confine themselves to the borders of the UK. Many of the cases we heard about took place across several countries, making enforcement more complicated. We note that since the introduction of a potential 25% charge on many qualifying recognised overseas pension schemes transfers in March 2017, there has been a significant fall in the number of transfers to these schemes, which have been a vehicle for scams in the past. But there remain problems with unscrupulous— and often unregulated—advisers based outside the UK. Cross-border co-operation remains important, as the involvement of firms or investments based abroad is a common feature of many scams. We recommend that the Money and Pensions Service should run—and report on—a programme to encourage eligible expatriates to access the free guidance it offers through its new consumer facing brand MoneyHelper when it launches in June 2021. (Paragraph 52) Prevention
Government Response
Acknowledged
HM Government
Acknowledged
The powers in the Pension Schemes Act 2021 allow the Secretary of State to set conditions, but it does not give powers to use a third parties list or determination. The Financial Conduct Authority’s (FCA) warning list can only be used to demonstrate where caution should be applied by the consumer and not as a way to say a transfer cannot go ahead. Furthermore, the FCA list does not include just “scams” specifically, but also instances of unregulated actors suspected of carrying out regulated activity. The Department for Work and Pensions (DWP) has made sure its system of red flags reflects similar circumstances to those used by the FCA warning list, and they will help prevent transfers from proceeding if there are indications of a significant risk of a scam or fraud around the transfer. For example, a red flag may prevent a transfer going ahead if the advice has been provided by firms or individuals without appropriate regulatory permissions, or if there is evidence or a reasonable belief the member was offered early access to some, or all, of their pension savings before the age of 55. The red flags will be supported by a system of ‘amber flags’ which may only allow a transfer to proceed when the member is able to provide evidence to the trustee or scheme manager that they have taken specific guidance via the Money and Pensions Service. The amber flags might be used, for example, in circumstances where the fees being charged are unclear or high or the member shows limited or no understanding of the charges. The DWP has discussed this system of flags extensively with stakeholders, including the FCA and the Pension Scams Industry Group. 12 Responses to the Committee’s Fifth Report of Session 2019–21