XPS warns that scam checks remain critical, following DWP consultation

XPS warns that scam checks remain critical, following DWP consultation

15 Jun 2021

• XPS welcomes new consultation which will allow trustees to block transfers from proceeding in cases where certain conditions are not met
• However, one in three high risk transfers would not be flagged under proposed legislation, meaning ongoing trustee diligence is vital

XPS data reveals that one in three high risk pension transfers since July 2018 would have satisfied the ‘first condition’ of the Department of Work and Pensions’ proposed legislation designed to reduce scams. The data comes from XPS’ Scam Protection Service, which allows trustees to track, analyse and respond to developments in scam activity.  

The proposed conditions will give trustees greater ability to prevent transfers in certain circumstances. These conditions are intended to enable trustees to restrict transfers where there is a risk of a pension scam.

However, to minimise the chance of a scam, trustees must continue to carry out robust scam protection measures, such as those recommended by the Pension Scams Industry Group Code on combating pension scams. Measures include analysing incoming requests and speaking with members to ensure they understand any risks.

Mark Barlow, Partner at XPS Pensions Group, commented:

“The ability for trustees to block transfers in certain circumstances is a welcome step forward in the fight against pension scams. However, we are concerned that these conditions could suggest that certain transfers are “scam free” when we know this not to be the case. Evidence from our Scam Protection Service demonstrates how robust scam protection measures will continue to be vital in protecting member outcomes”.

 

Scam risk identified by XPS	Number of cases	Proportion that meet the First Condition (i.e. no further checks)
Flagged as a high risk of a scam	462	37%
Flagged as at some risk of a scam	1,143	69%
No scam red flags	2,184	64%

 

XPS has provided scam protection services for members leaving pension schemes since 2015, allowing it to track, analyse and respond to developments in scam activity. The service identifies whether any of over 40 possible red flags are present for members leaving their schemes. To date the scam protection team has been involved in 5,200 transfers representing over £1.3 billion of pension pots. The team also provide support to trustees and administrators to investigate any red flags identified.