A report from Westminster’s Work and Pensions Committee is calling on the UK Government to ‘act quickly and decisively’ to protect pension savers, more than five years on from the introduction of the pension freedoms, which have put people at risk of a much wider range of scams and fraud.
The report warns that commonly cited figures of the scale of pension scamming are likely to substantially underestimate the problem.
The situation is likely to be getting worse rather than better, with the covid-19 pandemic offering scammers new opportunities.
The Committee heard throughout its inquiry that pension scammers have moved online, with regulators powerless to hold search engines and social media to account for hosting scam adverts as they do traditional media.
Tech firms such as Google are accepting payment to advertise scams and then further payments from regulators to publish warnings – a practice the Committee describes as ‘immoral’.
The Government must now rethink its decision to exclude financial harms from the forthcoming Online Safety Bill and use it to legislate against online investment fraud.
In the same way as traditional media, online publishers should be required to ensure financial promotions are authorised.
The report also calls for the multi-agency task force set up to tackle pension fraud to be strengthened.
The existing Project Bloom should be renamed the Pension Scams Centre and given dedicated funding and staffing to manage an intelligence database and law enforcement.
Currently the fragmentation of reporting, investigation and enforcement has made tackling pension scams more difficult.
The Financial Conduct Authority must also ‘raise its game’ and publish information about its enforcement action, with the Committee hearing numerous criticisms that it is not effective in stopping scams, punishing scammers or retrieving scam proceeds.
Rt Hon Stephen Timms MP, Chair of the Work and Pensions Committee, said: “The pension freedoms brought more choice for savers on how to use their pension pots, but the reforms have also opened up a whole new world of opportunity for scammers and fraudsters.
“At the same time, a woeful lack of online regulation has helped them reach more people than ever before.
“The result is an online free for all, where scammers can advertise with impunity while the tech giants line their pockets from the proceeds of their crimes.
“With global firms such as Google being increasingly influential as providers of information, consumers looking for financial advice are being let down by not being afforded the same level of protection they receive from adverts which appear on television or in a newspaper.
“There must now be parity across the media to ensure all adverts are regulated and the Government should use its Online Safety Bill to act.
“Tighter online regulation must be just the first step in improving protections for savers. Stronger enforcement with a new Pensions Scams Centre, a more effective FCA and extra support for victims are also desperately needed.
“Pension scams can cause huge financial harm and psychological distress and any one of us saving for the future is at risk of falling prey to a scammer.
“The Government and the regulators have been left playing catch-up following the pension freedom reforms and must now act quickly to protect savers and their hard-earned money.”
Rocio Concha, Director of Policy and Advocacy at Which?, said: “This report is a damning indictment of the approach of tech giants like Google to tackling scams.
“These companies have some of the most sophisticated technology in the world, yet they are failing to utilise it to prevent scammers from abusing the platforms by using fake and fraudulent content on an industrial scale to target victims and devastate lives.
“The case for including scams in the Online Safety Bill is overwhelming. Online platforms must be given a legal responsibility to identify, prevent and remove fake and fraudulent content from appearing on their sites and give their users the protection they deserve. The government must not miss the opportunity to act now.”
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