Fraud cases surge as markets fall

Anti-avoidance investigations more than doubled between 2008 and 2009, figures seen by schemeXpert.com  show, with the resurgence continuing into 2010.

In 2009, the regulator opened 35 such investigations – which can lead to contribution notices, financial support directions and employer settlements – compared with just 17 in the previous year.

This shift carried into 2010 with 23 investigations already opened by the end of October. The regulator puts the increase down to the impact of the economic downturn and “its experience in identifying the tell-tale signs”.

Cases of suspect activity falling outside of the avoidance framework have also seen a steady rise. In the first three years of the regulator’s existence, it opened only one investigation a year, but 2008 saw two investigations open and three in 2009.

Two further investigations have opened so far this year. The regulator told schemeXpert.com   it was faced by “more creative and often highly complex models” of fraud, with the “sole purpose” to defraud members, taxpayers, or both.

June Mulroy (pictured), executive director of business delivery, said there was still some difficulty in categorising fraud, as investigated earlier this month .

Some of the bad behaviour we’ve seen ranges from outright theft at one end of the spectrum to unjustifiably high charges and certain avoidance activity at the other,” she said.

 “The unifying issue here is that somewhere, someone is seeking to abuse pension schemes and/or taxpayers for their own financial gain.”

Regulator guidance on governance, data standards and whistleblowing is helping trustees defeat the challenge, she added.