RSM UK gives timely reminder to trustees to take steps to protect members from scams
The sentencing of two former financial advisers, Mark Kelly and Rikki Nicholls, to six years imprisonment for conspiracy to defraud and money laundering on July 15 highlights the need for trustees to take steps to protect their pension scheme members from fraud, says RSM UK. Since the new transfer process requirements were introduced last November, pensions trustees have had increased responsibility to identify and prevent pensioners losing their funds to fraudulent investments.
In this recent case, the two men persuaded pension holders to transfer their pensions into accounts controlled by Mr Kelly, leaving certain sections of the application forms blank, enabling Kelly and Nicholls to complete them later. Funds were then placed into risky investments without the holders’ consent, after Kelly and Nicholls extracted substantial unauthorised commission payments. Affected members’ losses ranged from £10,000 to £200,000, and in some cases, their entire pensions savings were lost.
Elisabeth Storey, pensions audit director, RSM UK says: ‘This is a stark reminder that fraudsters will seek to target vulnerable pension scheme members, particularly now, as the cost of living rises. Some people may see moving their pension funds to somewhere more accessible as an easy solution to their money woes, making them more susceptible to scams. The new transfer process requirements that took effect from November 2021 should help prevent similar fraudulent activity from being successful in future, and it’s important for trustees to understand the important role they now play, since this regulation was introduced, to help protect their pension scheme members from the growing risk of fraud.’
Data from Action Fraud shows £2m has been lost since the start of 2021 due to pension scams. RSM UK recommends trustees take the following steps to help protect their members;
- Confirm that the administrators regularly communicate the risks of scams to their pension scheme members in line with the November 2021 requirements
- Check with the administrators that member data is protected from unauthorised access and that it cannot be extracted from the admin system
- Ensure any transfer forms can never be signed by the member as blank forms
- Make sure any websites, newsletters and benefits statements repeat the scam warnings that The Pensions Regulator has provided – including the message that blank instruction forms should never be signed
- When a transfer is requested, trustees should confirm with their administrators what communications are issued to members and satisfy themselves that this is adequate
- Ensure regular communications to members includes clear timely signposting to the free advice available from Pension Wise.