The Pensions Regulator has, for many years, campaigned to reduce the number of pension transfer scams. Its efforts appear to be having an effect. Cold calling, a typical sign of a scam, is decreasing and the number of UK savers receiving unsolicited approaches about their pensions fell from around 20% in 2017 to 7% in 2022. The Regulator appears to have evolved its approach to tackling these scams by placing greater emphasis on trustees and administrators as the first line of defence. It has also sought greater collaboration with the Financial Conduct Authority (FCA) – both sensible courses of action which may have significant long-term consequences for trustees.
The Regulator and the FCA place a heavy and growing emphasis on pension trustees and administrators as key to tackling scams, expecting them both to conduct due diligence when receiving transfer requests. A typical LinkedIn post from the Regulator that “as a trustee or administrator, you are the first line of defence [against pension scams]” was posted five times in one week in September, indicating just how keen the Regulator’s focus is in this area. For its part, the FCA outlines in new guidance the depth of analysis needed from trustees and administrators, including the expectation that firms conduct assessments of customer vulnerability, and participate in horizon scanning to identify potential scams. This guidance is cross-referenced by the Regulator in its relevant announcements, with trustees being advised to email the FCA in all transfers of concern.
Nausicaa Delfas, the Regulator’s CEO, stated in a recent speech that “we are unapologetic about the standards we expect from trustees… we should all do more to ensure that every trustee body has an appropriate level of skill and professionalism”. The direction of travel therefore appears to be in favour of increased FCA collaboration, oversight and the potential authorisation of pension trustees and administrators in future.
This is likely to be a sensible approach in tackling pensions scams. Under current guidance, trustees should report suspicions and concerns of scams and those involved to Action Fraud and the Pensions Regulator, and also report concerning pension transfer requests and individuals who provide unauthorised advice on pension transfers to the FCA. Given their central role in preventing pension transfer scams, imposing higher standards and reporting obligations on trustees is likely to help prevent members becoming victims, and ensure that suspicious schemes are reported early in order to raise awareness industry-wide.