Financial scams have been on the increase during the Coronavirus pandemic. Impersonation scams have almost doubled in the first half of 2020 with almost 15,000 cases reported, up 84% compared to the first half of 2019. According to UK Finance, £58m was lost to impersonation scams in the first half of the year.
According to Quilter, Action Fraud and investigatory agencies are being forced to only pursue the pension fraud cases they believe can lead to a successful criminal justice outcome. However, due to pension scams being extremely complex and requiring considerable police resources to investigate, the chances of most pension scam cases reaching the stage are slim.
In 2019 nearly 400 pension fraud reports were submitted to Action Fraud yet just 26 cases were given to the police to investigate, just 6.6% of the reports received. It is not clear if any of these investigations led to convictions.
Quilter has urged the 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 called for new measures to tackle some of the ways in which scammers target their victims online.
Jon Greer, head of retirement policy at Quilter said: “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.
“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.”
As the risk of pension scams increases, XPS has launched a Red Flag Index as part of its monthly Transfer Watch tracker which measures the incidence of possible scam red flags in cases covered by their scam protection service. The pension group said this will help give regular insights into activities that signal a threat to member outcomes.