On the go: More than half of all scams can be linked back to unregulated introducers or advisers, according to research by the Pension Scams Industry Group.
The study found that 52 per cent of suspected scams cases flagged by pension schemes on transfer requests involved an unregulated introducer, an adviser in a different country from the member, or an adviser who appears on an internal watch list because of previous concerns.
PSIG gathered information from three pilot providers – Phoenix Life Assurance Company, Standard Life Assurance Company and XPS Pensions Group – reviewing 27,087 cases, with a total value of £1.33bn and an average transfer value of £225,337 for trust-based and £44,029 for contract-based.
One significant concern was member awareness. In just under half (49%) of cases, the member had limited understanding or appeared to be unaware of who was providing the advice, the fees being charged, or the receiving scheme to which the transfer would be made.
Twenty per cent of those cases flagged as potential scams related to the terms of the transfer, including investment returns, guarantees made or the ability to access funds. Suspicious schemes were also a common reason for flagging, although only 6 per cent of transfers in the sample examined appear to have originated from a cold call
Administrators can make a difference
Where due diligence goes beyond a short desktop review to a more detailed investigation by experienced staff, the number of suspicious cases identified rises to 12 per cent from 0.5 per cent.
The time spent by administrators on due diligence ranges from 15 minutes for a straightforward case to 10 hours or more for complex ones. This means in the sample alone, it is likely that more than 14,000 man-hours have been spent on due diligence in one year, a significant investment by the industry.
Quality of adviser is at the top of the list of practitioner concerns, with member awareness a close second.
Margaret Snowdon, chair of PSIG, said: “This shows that our efforts to convince individuals about the dangers of scams cannot simply focus on the cold-calling ban, as perpetrators are already using other means of contact – like email and online advertising, as well as word of mouth and factory-gating.”
Sankar Mahalingham, head of DB Growth at XPS Pensions Group, added: “XPS Pensions Group have found signs of potential scam activity increasing over the last two years from 1 in 12 in 2017 to 1 in 8 cases in 2018. This shows that scammers’ methods are continually adapting and gathering pace.”
