Industry calls for regulatory speed and stronger approach to scams

A joint call for input on regulating the pensions and retirement income sector, launched by the Financial Conduct Authority and the Pensions Regulator in March, closed on June 19.

The FCA, and the regulator for that matter, have got a public interest remit, and when they think something’s wrong, and they think that these issues are not being addressed by government, they should say so

David Everett, ACA

Both the Institute and Faculty of Actuaries and the Association of Consulting Actuaries have responded by calling for a stronger and more coordinated regulatory approach to pension scams.

Too little, too late

The ACA said that one clear failing on the Pensions Regulator’s side has been its approach to scams. “Far too much money has been allowed to leak out of the regulated system,” states the organisation’s response.

The ACA said that action by the regulator, government and government agencies “has been either too little, too late or not at all”. It suggested that both regulators could be “more independent and forthright of view, in public, when it is clear that the government is not minded to tackle the issue, or give it the priority that it deserves”.

“Our concern has been that there has been precious little effective activity when it comes to addressing these scams,” said David Everett, chairman of the ACA’s pension schemes committee, adding that “the issue seems to be growing”.

He continued: “I do think that both the FCA, and the regulator for that matter, have got a public interest remit, and when they think something’s wrong, and they think that these issues are not being addressed by government, they should say so.”

Everett said they may well be having these discussions behind closed doors, but noted that there is still a need to eventually go public on it.

Earlier this year, the Work and Pensions Committee said regulators’ and the UK government had let down former members of the British Steel Pension Scheme, and had done “too little too late” to stop unscrupulous advisers.

The ACA said in its response that one area that potentially has fallen between two stools is the regulation of DB to DC transfers, especially as seen in relation to the BSPS.

Regulators urged to minimise gaps

The IFoA has urged the Pensions Regulator and the FCA to minimise any gaps between their respective regulatory focuses, particularly gaps that can be exploited by those giving inadequate advice and those seeking to exploit members through scams.

It said that improved joint working between the two watchdogs could help prevent scams, especially in terms of the speed at which potential cases are identified and subsequently tackled.

Currently, trustees could face penalties from the Pensions Regulator if they fail to permit a transfer, even if the trustees or the FCA suspect a scam.

In its response, the IFoA said that both regulators “could facilitate improved protection for members by proactively working together on live cases, rather than the current retrospective approach”.

It suggested that the Pensions Regulator could make it clear that they would not act against trustees who delay transfers where the FCA is investigating potential scams.

The IFoA's pensions board chair Mark Williams said "there is a reasonable window of time for that transfer to take place" so "there's ample time there for there to be a more joined up approach, and therefore for that intervention to take place at a more timely moment, rather than... after the event".

Shore up consumer confidence

He noted that there has been a lot of negative publicity around pensions in recent years, so consumer confidence has been eroded.

"It's never been more important for people to save more for retirement", said Williams, adding that there is a role for the regulators to adopt a joined up approach to promote that and help savers feel confident in terms of understanding pensions and the value of contributions.

Mark Futcher, head of workplace wealth at consultancy Barnett Waddingham, agreed with the push for a greater focus on tackling and preventing pension scams.

“We just want the regulators to start showing a bit more tooth,” he said.

“We know the kind of companies that are scamming… let’s start making more noise about it, let’s start fining them... let’s start making it much more obvious to people what is a scam, and spending money on advertising that,” Futcher added.

He said that there are lots of things the regulators can do to shore up confidence in pensions and promote better outcomes, “but they don’t”.