I am grateful for the assurances that the Minister has given. One of the problems is that the responsibility for responding to scams cuts across many different bodies. The court ruling last week that the fraud compensation fund could be used to compensate some pension scam victims is a significant development.
The Police Foundation published an important report in September called “Protecting people’s pensions: Understanding and preventing scans”, and that recommends a coherent set of principles for law
enforcement and regulators, including: the facilitation of a more co-ordinated and consistent response across the various agencies; a specialist fraud victim support service; regulation for introducers, who are not regulated at the moment; and, new digital technology for the police to support and speed up analysis of the large volumes of evidence collected in investigations.
5.45 pm
The Bill was amended in the other place so that if a defined benefit transfer application raises one of the red flags on a prescribed list of features likely to indicate that a scam is going on, the trustees must delay the transfer until the saver has taken financial advice. The four amendments are based on work by the Pension Scams Industry Group, and I pay tribute to Margaret Snowdon and her colleagues for their work. The amendments would empower trustees to refuse the transfer if they had good grounds, based on the red flag analysis, for believing that the proposed transfer involved moving pension savings into a scam. I welcome the assurances that the Minister has given, and has just repeated, that he will bring forward regulations under existing powers in the Bill to have that effect. I noticed that research carried out last month by YouGov for the People’s Pension found that 78% of people questioned agreed that pension companies should be able to step in to stop a transfer if they believe it is a scam.
As I discussed in Committee, we need to be careful about exemptions from the regulations that the Minister will table. It would be a serious mistake to exempt all FCA-registered schemes, because unfortunately a lot of scams are FCA-registered. I am told, for example, that it is perfectly possible for schemes to be both FCA-registered and on the FCA warning list. An overseas adviser, probably somewhere else in the EU and not FCA-registered, could use the platform of a UK self-invested personal pension that is FCA-registered to offer exotic investments overseas. That is the form that many scams take, and we need to be careful not to exempt arrangements of that kind from the regulations when they come forward. We must avoid loopholes that allow crimes to carry on.
Implementation of the pensions freedoms without the intended safeguards has caused a great deal of harm. We must now put those safeguards in place. I welcome the assurances that the Minister has given, and I welcome the fact that the Department will consult widely on the regulations to be drawn up in parallel with the Select Committee inquiry. I hope we can make speedy progress. Drastically increasing the take-up of Pension Wise guidance, as proposed in new clause 1, is a key part of the solution.