A letter sent to the chair of the Work and Pensions Select Committee has urged MPs to take pension fraud seriously.
Industry group, Transparency Task Force, have made a formal request to the Work and Pensions Committee to open an investigation into the extent of pension scams. In the letter, the task force’s founder states that the committee is “uniquely” placed to fully embrace the problem of pension scams as a major public interest issue.
The Founding Chair, Andy Agathangelou, stated:
It is extraordinary that we do not even know how much money has been lost to pension scams.
Certainly, it is hundreds of millions of pounds, every year, more likely billions.
The letter also notes that one in three Britons have been the target of a scam in lockdown, according to estimates, with the coronavirus pandemic only increasing the threat of fraud.
Research from the All-Party Parliamentary Group on Pension Scams has found that with more people staying at home due to social distancing measures, it was more likely for pension savers to be contacted by scammers by phone or online.
Data from Canada Life from 26th May found 5.2m people in the UK were targeted, or knew someone who had been conned by, a financial scam since the beginning of the coronavirus outbreak.
The letter carried on:
We believe an investigation by your committee can make a real difference in putting a stop to these practices, which are opposed by politicians of all persuasions, but where a fragmentation between regulators, policy makers, legitimate pension providers and law enforcement has meant the scammers continue to prey on the public.
We are sure that the work and pensions committee is uniquely placed to fully embrace the problem of pension scams as a major public interest issue, champion the interest of the public, lead a full and transparent inquiry, [and] bring together all key stakeholders.
Fraud and pension scams on the rise
Data from August 2019 showed that investment fraud reports have been steadily increasing for a number of years. 8,000 fraud reports were made between January – August 2019, which was double the amount of the previous year in the same period.
The data was released last year in the wake of a Times undercover investigation into Action Fraud, the national fraud and cybercrime reporting centre, which saw massive failures in the current system.
Pensions Scams Industry Group chairwoman Margaret Snowdon said the rise in investment fraud is a "serious matter" and warned:
The pension scams risk is being seriously underestimated by basing only on reported crimes… We know that people don't report pension scams and potential scams to Action Fraud as the reporting system is not designed to report such matters.
In 2018 there were 9,398 reported scams according to Action Fraud, in which fraudsters would convince families and small investors to put money into high risk and unsuitable investments.
The Serious Fraud Office (SFO) also stated Self-Invested Personal Pensions (SIPPs) were at the heart of these frauds, and that the pattern of pension scams has barely changed over the past five years.
Reports from Money Marketing show that fraudsters are not being put off and are still taking advantage of pension freedoms.
Last year, an SFO spokeswoman said of scams and fraud:
Fraudsters are always looking for ways to scam people, and pensions is just one aspect of that.
Where possible, we investigate those who commit fraud and bring justice to those affected, but we can only help after a scam is discovered.
How can Smooth Commercial Law help?
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