Each year, millions of pounds of hard-earned pension savings are stolen by scammers. Since 2017, a total of GBP30,857,329 has been lost to such scams, but this could be just the tip of the iceberg given many victims are unaware they have fallen victim to a fraud.
Each year, millions of pounds of hard-earned pension savings are stolen by scammers. Since 2017, a total of GBP30,857,329 has been lost to such scams, but this could be just the tip of the iceberg given many victims are unaware they have fallen victim to a fraud. Pension scams are extremely complex, require considerable police resources to investigate, and in many cases are only discovered years after the event. It can often take years of information gathering and investigatory time before the police get to the point of prosecution.
This means that Action Fraud and the investigatory agencies are forced to prioritise the cases they believe can lead to a successful criminal justice outcome. For the vast majority of pension scam cases, the chances of reaching this stage are slim.
Figures obtained by Quilter under a freedom of information request demonstrate that in 2019, nearly 400 pension fraud reports were submitted to Action Fraud. Yet just 26 cases, little more than two a month, passed the review process and were given to the police to investigate.
Therefore, just 6.6 per cent of pension scam reports received by Action Fraud were passed to the relevant police force for investigation in 2019. It remains unclear how many, if any, of those investigations led to a criminal justice outcome.
The same figures collected by Quilter show that so far in 2020, 161 pension fraud reports were received by Action Fraud but only 24 have been disseminated to the relevant police force for investigation following a review by NFIB.
In light of difficulties in investigating pension scams, Quilter is today urging government to do more to tackle the threat of scams by making it harder for the criminals to operate and reach potential victims.
Responding to the Work and Pensions Select Committee inquiry on protecting pension savers, Quilter has called for new measures to tackle some of the ways in which scammers target their victims online.
To do this, Quilter urges the government to include scam adverts, fake websites and other financial harms within the scope of the Online Harms Bill, which was due to be introduced to Parliament next year but no firm commitment has been made by the government.
In doing so, search engines and social media platforms will, for the first time, have a legally enforceable duty to remove suspected scammers and scam adverts immediately on notification and improve their due diligence process so that it becomes much harder for scammers to market investment products using paid adverts.
Jon Greer, head of retirement policy at Quilter, says:
“We are entering a period of considerable economic uncertainty, and one in which generating a decent return on your investments will be extremely challenging. This is the ideal environment for scammers to thrive and it is no surprise to see huge amounts of money still being lost each year at the hands of criminals.
“The fact that it is so hard to investigate and prosecute pension scams is effectively handing pension scammers a get out of jail free card. If you are mugged, it’s highly likely that the police will investigate, but lose your life savings to a pension scammer and your odds don’t look good.
“Pension scams and other investment frauds are extremely complex, they can span multiple jurisdictions, and can often go uncovered for years before the victim realises their money is gone. This all makes investigating the scams incredibly time consuming and expensive, which is why the police have to prioritise those few cases where they have a chance of success.
“The legal deterrent appears to be ineffective, so more must be done to prevent scammers from operating, and to do this we must cut the line of communication between the scammers and their victims: search engines and social media.
“The government have taken action on unsolicited pension calls with the ban on cold calling, but scammers are sidestepping the legislation and moving online. Movement on the regulation of search engines and social media platforms has been painfully slow and the regulation has failed to keep up with the evolution of scammers.
“The government has a perfect opportunity to bring the regulation into the 21st century by including financial harms within scope of the forthcoming Online Harms Bill. This will mean that, for the first time, search engines and social media platforms will be bound by a statutory duty of care to tackle harm caused as a result of content or activity on their services.
“In doing so, search engines and social media providers will be legally required to remove suspected scammers immediately on notification, and not allow them to operate in the first place, or face sanctions from the new regulator.”