The scale of pension scamming is getting worse and a stronger clampdown is needed, a committee of MPs has been told.
The Work and Pensions Committee heard from consumer groups and industry experts on pensions scams in an evidence session looking into the impact of the pension freedoms and the protection of savers.
Asked by the committee about the scale of pension scamming, Andy Agathangelou, founder of the Transparency Task Force, said: “I personally think that the matter is getting worse.”
He continued: “Many people are becoming financially distressed and they become an even easier target for crooks and scammers…
“The scammers have confidence and knowledge and they can trick people into moving the pension funds elsewhere.”
He added: “I think we’re going to be seeing some very, very worrying data indeed.”
Later, referring to scammers’ use of the internet, he added: “The internet is riddled with bear traps for people with money.”
He said rogue adverts were being used as a front for criminal activity, but he added that despite alerts being sounded over the problem “we’re not convinced that all of that alerting that’s being done is being effectively picked up by the regulators”.
Also highlighting the problem of scam text messages, Mr Agathangelou added: “Unless the regulators clamp down on this, it is a phenomenally scalable business for these crooks, and that’s the big worry.”
Richard Piggin, head of external affairs and campaigns at Which?, said: “As with all fraud, I think it’s likely to be under-reported.
“What we can tell you is that the impact on any given individual is significant, both in terms of the sums of money lost, tens of thousands, maybe hundreds of thousands of pounds.”
Mr Piggin added: “We also think there is a risk of looking at the issue too narrowly.
“That we focus on pension liberation scams, or transfer scams, when you see that over half of all pension pots are withdrawn fully into cash.
“We see people then taking that money and putting it into their current account, into their savings account, where there they are vulnerable to a whole range of scams that could put their pension savings at risk.”
He said the data “is likely to be more significant than perhaps we’re estimating at the moment”.
Tim Fassom, director of government relations and policy at the Personal Investment Management and Financial Advice Association (PIMFA), said pensions are one of the “pools of assets” that scammers target “and they will go after any pool of money that an individual has available”.
He said: “Pensions are particularly vulnerable, because they’re often the largest asset.”
Margaret Snowdon, chairwoman of the Pension Scams Industry Group (PSIG), said: “If we had a better sharing of intelligence, it would be much easier to deny some of these scammers the funds that they get.”
She added: “We do need all of the regulators and authorities to be joining up… collaboration is absolutely vital.”
After the hearing, a spokesman for the Pensions Regulator (TPR) said: “TPR has a process in place for referring adverts and websites of concern to the appropriate agencies, who are best placed to take action to remove them.
“As part of our intelligence function, we monitor evidence of transfers involving unregulated entities operating outside of the UK during our investigations. We continue to work with national and international law enforcement partners and UK and overseas regulators to protect savers and, where appropriate, make use of all legal avenues to support our work including in our criminal prosecutions and restraint and confiscation proceedings.
“We will continue work other agencies through Project Bloom to bring scammers to justice, taking a lead role or supporting other agencies and law enforcement partners as appropriate. But we also know education is one of our best weapons in that battle.
“Anyone can be a target, which is why it’s vital all savers should be ScamSmart, know the common signs of a scam and always check who they are dealing with.
“Savers can find more information on protecting themselves from scammers at www.fca.org.uk/scamsmart.”