Nearly half of Money and Pensions Service (MaPS) amber flag scam guidance sessions have been conducted without knowledge of the reason for the flag being raised, a Freedom of Information request by Quilter has revealed.
New pension transfer rules were introduced in November 2021 requiring the trustees of a transferring pension to raise an amber flag, which pauses a transfer, if there is cause for concern or there are overseas investments included in the receiving scheme.
Since the new rules came into force, a total of 3,731 members have received scam guidance from the MaPS as a result of an amber flag being raised. The number of amber flags has increased significantly month on month, jumping from 20 guidance sessions in December 2021 to 1,067 in June 2022.
However, the data shows that in nearly half (44%) of the cases during April to June 2022, the reason for the flag was listed as “unknown.” Additionally, overseas investments have resulted in many potentially low risk pension transfers being put on hold.
Quilter said that due to the very broad way in which the rules are worded, some pension schemes are raising amber flags on overseas investments covering mainstream investments, such as funds from major asset managers that are investing globally.
According to the investment group, MaPS does not appear to be proactively improving the data they are collecting as they confirmed in the FOI that they do not correspond with members, schemes or providers about the reason for the amber flag.
Jon Greer, head of retirement policy at Quilter, said iIn the 12 months to 31 November 2021, the Money and Pensions Service took just 482 calls and webchats in relation to pensions scams. Comparatively, in the seven months that followed the introduction of the new pension rules, this number soared to 3,731.
Greer said: “This highlights the real disconnect between the number of people whose pension transfers were potentially being targeted by a scam, versus the number of people who were able to identify this and reach out for help prior to the rule change.
“However, while it is positive to see such a noted increase in the number of people receiving scam guidance when it comes to their pension transfers – particularly where there is a genuine cause for concern – there remains a clear issue with transfers being halted where the trustees are finding an amber flag, but MaPS is not being made aware of the reason.
Inaccurate data
Greer aded that the lack of information provided to MaPS in terms of the reason for the amber flag being raised “is concerning”.
“If the information is not logged, and particularly whether there was an actual risk of a scam, it will be difficult to assess where scams are focusing and may provide an inaccurate picture of the effectiveness of the regulation.”
Greer added: “What’s clear is that we need an improvement on the data collected to see the reasons for the member attending the scam session – no doubt this will help the session with the member, and secondly, we need to resolve the impasse that trustees face in applying the letter of the law which is out of step with the policy intention.”
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