Pension Scams - Question

– in the House of Lords at 12:18 pm on 14th October 2020.

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Photo of Baroness Warwick of Undercliffe Baroness Warwick of Undercliffe Labour 12:18 pm, 14th October 2020

To ask Her Majesty’s Government, further to the report by the Police Foundation and The People’s Pension Protecting People’s Pensions: Understanding and Preventing Scams, published on 7 September, what action they are taking to protect people from pension scams.

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions

The Government are committed to safeguarding consumer savings. We have introduced measures that assist all pension savers to understand their choices and alert them to possible risks through advice and guidance. To help protect people from scams, the Government have banned cold calling and tightened the tax registration procedures, and, via the Pension Schemes Bill, are limiting the statutory right to transfer. We also continue to raise awareness of scams through ongoing communications directly from the DWP and through other organisations.

Photo of Baroness Warwick of Undercliffe Baroness Warwick of Undercliffe Labour

That reply was encouraging—I thank the Minister. However, I hope that we can persuade the Government of how vital it is that even more specific actions are taken. Tragically, some scams make the victim complicit in the crime, so they lose all their money to the scammer and are pursued by HMRC for tax payments for pension liberation which they cannot meet. The police described HMRC’s approach as “unrelenting and uncompromising”. What action will the Government take to give some relief to these victims?

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions

I am sure that everybody feels sympathy for an individual placed in this position. HMRC collects the taxes that Parliament decides are due and seeks to treat each case sympathetically and on its own facts. I have talked to the Minister for Pensions about this issue and he is quite happy to meet the noble Baroness to talk further about it.

Photo of Baroness Altmann Baroness Altmann Conservative

My Lords, I declare my interests as listed in the register. I know that my noble friend is sympathetic on this issue. Will the Government consider establishing a central intelligence database to offer providers an early warning system for scams and help potential scam victims? Can my noble friend comment on any plans to centralise the confusing array of bodies for protecting consumers, including ScamSmart, Action Fraud, the police, regulators and Project Bloom?

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions

I assure my noble friend, and indeed the whole House, that this issue is very high on the Government’s agenda. It is what we would call work in progress. We have established Project Bloom, which brings together all finance organisations, the regulator and pension providers to see what can be done and to work collaboratively. The Minister for Pensions met representatives to hear their thoughts on what the industry and Government can do. I would say, “Watch this space”.

Photo of Lord Loomba Lord Loomba Crossbench

My Lords, I welcome this timely report by the Police Foundation and The People’s Pension. The scale of loss is staggering, as bogus companies can set up to instigate the frauds and are often closed quickly to avoid detection. What are the Government doing to strengthen checks on company registration so that only genuine companies are able to trade?

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions

The noble Lord makes a very good point. I think that I will need to write to him with the detail of those checks.

Photo of The Earl of Courtown The Earl of Courtown Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, there seems to be a sound issue for those attending virtually. I suggest that the House adjourns for five minutes.

Sitting suspended.

Photo of Baroness Drake Baroness Drake Labour 12:28 pm, 14th October 2020

My Lords, even where a key risk to their savings is identified and information and red-flag warnings are given to the individual, they can still transfer their pension, and too many do, regardless. Pension providers and trustees have few, if any, powers to stop this. Will the Government extend the powers of the regulator to allow an override of the individual’s statutory right to transfer in the event of a suspected scam, thereby safeguarding their savings and future well-being?

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions

I am happy to confirm to the noble Baroness that the Minister for Pensions has written to the chair of the Work and Pensions Select Committee about this—I will place a copy of his letter in the House of Lords Library—and I can confirm that the Government are already taking further legislative action through the Pension Schemes Bill. I say again that the Minister for Pensions is quite prepared to meet noble Lords to discuss this issue.

Photo of Baroness Janke Baroness Janke Liberal Democrat Spokesperson (Work and Pensions)

What plans do the Government have to improve support for victims of pension scams? The measures outlined in the report are criticised as inadequate. Can the Minister say what the Government plan to do about it?

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions

I apologise to the noble Baroness; I had trouble hearing her question. Perhaps I may read Hansard and write to her directly with a reply.

Photo of Lord Kirkhope of Harrogate Lord Kirkhope of Harrogate Conservative

My Lords, I refer to my entry in the Members’ register. Having heard my noble friend’s answer a moment ago to the noble Baroness, Lady Drake, I would nevertheless like to pursue the matter of the responsibilities of trustees and pension administrators. We are very sympathetic to beneficiaries who are subject to scams, but would it not be a good idea to oblige beneficiaries who wish to transfer pension pots to be in interpersonal contact with their administrators before that is permitted? Much of the paperwork at the moment is part of the scam itself, and trustees and administrators need some further protection from their liabilities.

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions

I take my noble friend’s point. The contribution that he has made just heightens the need for us to have more dialogue on this with the Minister for Pensions. However, as I have already said, the Government are taking further legislative action through the Pension Schemes Bill to enable regulations to be made prescribing conditions that, if not met, will limit an individual’s statutory right to transfer.

Photo of Baroness Sherlock Baroness Sherlock Shadow Spokesperson (Work and Pensions), Opposition Senior Whip (Lords)

My Lords, the FCA acknowledges the increasing role of online platforms, including social media, in promoting harmful information to consumers, including from pension scammers. However, the cold-calling ban that came into effect last year does not cover online activity, and scammers can get around the ban by first building relationships with consumers so that they then consent to a cold call. How will the Government update the law to keep pace with this very fast-moving digital environment, since it is clearly increasing consumer vulnerability to scams?

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions

I can confirm that the Government are well aware of this issue. I referred earlier to Project Bloom, which brings together government departments, regulators, enforcement agencies and industry representatives to share information and co-ordinate actions that will deal with situations such as this. I can confirm that we, particularly the Department for Digital, Culture, Media and Sport, are already engaging with technology companies.

Photo of Lord Taylor of Warwick Lord Taylor of Warwick Non-affiliated

My Lords, this study report is most welcome but there is an area that needs looking at for the future. Ethnic minority pensioners are said to be 24% worse off than white pensioners; indeed, the average total pension of BAME women is 51% less than that of white men. This pension inequality will become starker as the growing BAME population reaches retirement age, which may make BAME pensioners even more vulnerable to scams. Does the Minister agree that the Government also need to look into these related and relevant BAME pension issues?

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions

I say to the noble Lord that the Government must look into these matters. It is a great concern that people from BAME communities should be disadvantaged in such a way, and we will certainly do that.

Photo of Baroness Gardner of Parkes Baroness Gardner of Parkes Conservative

My Lords, most of the people who I meet who have suffered badly from these scams are, surprisingly, older people who have always been efficient and capable at dealing with their own affairs. Is there any way that the Government can keep these people up to date so that they know to avoid the scams that are currently around?

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions

It is a great tragedy that these scammers are so clever and such ruthless people. The Government passed legislation in 2015 making it a requirement that all people take advice, and we have banned cold calling, but there is a recognised need for more action to address this issue. It is important that people take advice from the Money and Pensions Service but I am sure that in the Project Bloom activity more communication will come out to people. I hope that this will help.

Photo of Baroness Bowles of Berkhamsted Baroness Bowles of Berkhamsted Liberal Democrat

One recommendation in the report is to ensure that victims of fraud are not liable for tax penalties. Will the DWP take that up with HMRC? If HMRC also suffered from the fraud, would greater protections be more forthcoming?

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions

I referred earlier to tax and the issues that people face as a result of scams. As I said to the noble Baroness, Lady Warwick, the Minister for Pensions is quite prepared to meet on this and other issues, and I will extend that invitation to the noble Baroness so she may raise her point.