The last time I wrote about scams, back in November, the Work & Pensions Select Committee was still in the middle of its inquiry, the Pension Schemes Act (PSA) was still a Bill and The Pensions Regulator had just pushed out its new Scams Pledge. Much has changed since then, bringing clarity in certain areas, but revealing there is much more to be done in others, particularly online.
You may remember that Work & Pensions Select Committee chair Steve Timms had secured many ‘assurances’ from Pensions Minister Colin Opperman that powers to override the right to transfer in some cases of suspected scams should be included in the previous Pension Schemes Bill’s accompanying regulations. The Bill became an Act in February this year, and the regulations are now expected to be fully in place later this year. The Committee, on its new report on scams, has also demanded the legislation to be reviewed in 18 months of the regulations becoming fully operational, allowing for any legislative adjustments to be made if there are any concerns.
The Committee’s Report On Scams
The WPC launched its report ‘Protecting pension savers – 5 years on from the pension freedoms: Pension scams’ earlier last month, bringing together hours of spoken evidence and a wide plethora of written submissions from across the finance industry, The People’s Pension was also included. The report is a great length, setting out in excess of 30 recommendations for Government, Action Fraud, the industry, regulators, HMRC and covers 4 distinct areas: prevention, recording and reporting, enforcement and supporting scam victims. Many of the recommendations do align with those set out in the report we produced in partnership with the Police Foundation – ‘Protecting People’s Pensions: Identifying and Preventing Scams’ – particularly with regards to the need for a broader definition of fraud, the establishment of a central intelligence database and further concerns over the continued pursuit of scams victims by HMRC. The Committee stated our report and our submission to the inquiry on the issues of a central intelligence database and the ‘uncompromising and unrelenting’ treatment of scam victims by the HMRC.
Digital Loophole
At the centre of the Committee’s report and recommendations, however, is the recognition that much more needs to be done in the digital world. The MPs called for global tech firms to be held to accountable for hosting scam adverts, saying it is ‘immoral’ that companies such as Google are most certainly ‘profiting’ from hosting both scams and additional warning adverts. There is no doubt that scammers have moved further online, yet regulators seem powerless to hold search engines and social media companies to account for hosting fraudsters’ scammer adverts (unlike traditional advertising media) and preventing them from creating duplicate websites of reputable companies. The law just isn’t keeping up with this fast-moving environment.
The narrow vision of the pensions cold calling ban, which came into effect back in 2019, adds further to the problem. The ban only excludes online activity. So, fraudsters are still able to continue to promote potentially harmful financial information to consumers on social media and search engines. Additionally, the forthcoming Online Safety Bill that has been proposed, which creates a new regulatory framework for online safety, excludes both online advertising and ‘financial harms’ (covered by a separate consultation). All of this creates a digital loophole for scammers to sneak through.
Steve Timms, his Committee colleague Neil Mills, the consumer group Which? and others spread across the financial services industry have cried out for financial harms to be included in the newly proposed legislation. In a recent interview with financial advice Leeds, Steve laid out his plans to table an emergency amendment to the Bill which would bring financial harms into its scope when it arrives before the Commons.