Source · Select Committees · Work and Pensions Committee
Recommendation 16
16
Not Addressed
Paragraph: 63
The FCA hosts a warning list on its website.
Recommendation
The FCA hosts a warning list on its website. The warning list publishes details of unregulated entities which appear to be carrying out an FCA regulated activity without the requisite authorisation or permission. The Minister for Pensions and Financial Inclusion told us that the powers under section 125 of the Pension Schemes Act do not allow a transfer to be blocked by a warning list operated by a third party organisation, such as the FCA. We recommend that inclusion on the FCA warning list should constitute a red flag. If this is not possible, then the red flags developed by DWP should be defined in such a way that any firm or individual appearing on the FCA warning list would trigger a red flag.
Government response summary AI-generated
The government response outlines ongoing work with the tech sector to explore voluntary approaches to reducing fraud and tackling fraudulent adverts, but does not specifically address the recommendation to make the FCA warning list a red flag for pension transfers.
Summary of the government's response below — read the verbatim text to verify.
Paragraph Reference:
63
Government Response
Not Addressed
HM Government · verbatim extract
Not Addressed
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
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