TPR looking into seven scam investigations posing £55m loss to savers

TPR looking into seven scam investigations posing £55m loss to savers

The Pensions Regulator (TPR) is carrying out seven criminal investigations into potential scams with indicative losses to savers' pensions of around £55m, the pensions watchdog has revealed.

In a letter to Work and Pensions Committee (WPC) chairman Frank Field, TPR chief executive Charles Counsell confirmed that the investigations cover 52 schemes and 38 suspects which the regulator is treating as targets.

Counsell also noted that these cover a "range of complexities and possible outcomes" - including potential charges of fraud, money laundering and employer-related investments.

Pension fraud is unfortunately an ongoing threat as scammers have chameleon like behaviour and are forever adapting to new opportunities"

The letter comes in response to a WPC evidence hearing on 26 June, in which Counsell promised a follow-up in writing on a number of issues which were discussed at the session.

One of the questions answered in the letter was around how the regulator informs members if their pension scheme is affected by a scam, in which Counsell referred to TPR and the Financial Conduct Authority's (FCA) ScamSmart website following the introduction of their joint initiative to combat scams last year. One section of the website enables consumers to check the FCA's warning list, as Counsell pointed out.

He further noted the regulator had been involved with tackling scams by chairing cross-government agency Project Bloom since 2016.

He added: "TPR contacts members where we need to do so as part of investigations, for example to obtain witness statements. More usually, the first time that members will learn of TPR's involvement is when we have appointed an independent trustee to take control of a scheme to protect members' savings from scammers.

"The independent trustee will write to members upon their appointment and, if they suspect a scam, they will inform members. Earlier contact would risk tipping off the scammers who may attempt to steal assets or cover up their actions."

However, on Saturday, The Times reported a number of cases of alleged scams, including legal attempts to persuade savers to make inappropriate investments, as well as criminal fraud. It estimated that £4bn a year is at risk to scams when applied to the pension transfer market.

Separately, former pensions minister Baroness Ros Altmann told the paper she wants a "scammers register", to fight mis-selling, noting there should be more data-sharing between the police, regulators, private companies and consumers to help combat the issue.  

Aegon head of pensions Kate Smith said: "Pension fraud is unfortunately an ongoing threat as scammers have chameleon like behaviour and are forever adapting to new opportunities.

"The introduction of the pensions cold calling ban shows that the industry and government are looking for ways to make fraudsters lives difficult. However, much more is needed to be done, particularly as scammers move online and use social networks to dupe individuals out of their money.

"The government should work closely with the regulators to stem the tide of fraud and help keep the threat of scammers in the spotlight. A clear message needs to be sent to fraudsters that pension scams will not be tolerated by significantly increasing the number of prosecutions."

Freedom and Choice 

There has been particular concerns around scams since Freedom and Choice was introduced in 2015, allowing members to access their pot at age 55. An XPS Pensions analysis last month found the number of red flags reported by the company's scam identification team almost tripled between June 2018 and June 2019. The reported scam activity covered £73m of member's pension savings over a year.

The Pension Scams Industry Group updated its voluntary code of practice earlier this year to reflect regulatory and legislative changes that have affected the industry over the last year. This included the cold-calling ban, which came into force in January.

Data published in February by Action Fraud revealed £197m was lost in a year to scammers in 2018, with the FCA warning the public to be vigilant of investment scams.