New Freedom of Information (FOI) data from the Money and Pensions Service (MaPS) gathered by wealth manager, Quilter, reveals a concerning number of MaPS amber flags related scam guidance sessions are being conducted without knowledge of the reason for the flag being raised.
The new MaPS data shows that in nearly half the cases MaPS does not know the specific reason for the member attending the session. ‘Unknown’ was given as the reason in nearly half (44%) of recorded cases over the past three months (April-June 2022).
Additionally, overseas investments remain a common cause of an amber flag being raised, resulting in many potentially low risk pension transfers being put on hold for this reason to the end of June 2022. Due to the very broad way in which the rules are worded, some pension schemes are raising amber flags on overseas investments covering mainstream investments, such as funds from major asset managers that are investing globally. MaPS warned that the high proportion of ‘unknowns’ is likely to create a significant skew in relation to the numbers, so the real figure could be higher still.
Worryingly, MaPS does not appear to be proactively improving the data they are collecting as in the same FOI response they confirmed they “do not enter into correspondence with members, schemes or providers about the reason for the amber flag.”
|April 22||May 22||June 22|
|Complex investment structure||21||29||18|
|Evidence provided not genuine||12||5||8|
|High risk/unregulated investments||60||55||69|
|High volume of same scheme||7||3||1|
|High volume with same financial adviser||4||6||2|
|Month||Scam guidance sessions||% change from previous month|
The new pension transfer rules introduced in November 2021 require the trustees of a transferring pension to raise an amber flag, which pauses a pension transfer, if they find that there are overseas investments included in the receiving scheme or other relevant issues. Before the transfer can be authorised, the member involved must prove they have received scam guidance from the MaPS following the transfer being flagged.
Since the introduction of the new transfer rules, a total of 3,731 members have received scam guidance from the Money and Pensions Service as a result of an amber flag being raised by a trustee (to June 2022). Month on month, the number of amber flags raised have increased significantly, leaping from just 20 guidance sessions in December 2021 to 1,067 in June 2022. However, the rate of month-on-month growth appears to be slowing and was nigh on level between May-June 2022.
Jon Greer, head of retirement policy at Quilter said:
“In the 12 months to 31 November 2021, the Money and Pensions Service took just 482 calls and webchats in relation to pensions scams. Comparatively, in the seven months that followed the introduction of the new pension rules, this number soared to 3,731. This highlights the real disconnect between the number of people whose pension transfers were potentially being targeted by a scam, versus the number of people who were able to identify this and reach out for help prior to the rule change.
“However, while it is positive to see such a noted increase in the number of people receiving scam guidance when it comes to their pension transfers – particularly where there is a genuine cause for concern – there remains a clear issue with transfers being halted where the trustees are finding an amber flag, but MaPS is not being made aware of the reason. The lack of information provided to MaPS in terms of the reason for the amber flag being raised is concerning. If the information is not logged, and particularly whether there was an actual risk of a scam, it will be difficult to assess where scams are focusing and may provide an inaccurate picture of the effectiveness of the regulation.
“What’s clear is that we need an improvement on the data collected to see the reasons for the member attending the scam session – no doubt this will help the session with the member, and secondly, we need to resolve the impasse that Trustees face in applying the letter of the law which is out of step with the policy intention.”