Current regulation around pension transfers is “completely unsatisfactory”, according to Margaret Snowdon, chair of the Pension Scams Industry Group.
The PSIG carried out a consultation, which closed on Wednesday (July 31), looking at the future of the organisation.
It was aimed at pension trustees, advisers and administrators and others with an interest in protecting pension scheme members from scams.
Snowdon told FT Adviser the PSIG code of good practice has been “fundamental” in changing behaviours and protecting people.
However, she added: "People have been a little bit disappointed we haven’t been able to finalise another code while we wait for the regulations to be clarified and it’s true.
“We haven’t been able to do that because we can’t just tell trustees to ignore the law and regulation even though we all know the position we are in with regulations is completely unsatisfactory."
Snowdon also said the body has received positive feedback about its pension scam industry forum and respondents wanted the PSIG to continue it.
Regulation
From a regulatory perspective Snowdon said she wants to see the law changed to make it safe for trustees and providers to be able to refuse a transfer if they suspect a scam.
She said: “The regulations were meant to do that when they came out at the end of 2020 but they were too clever, almost.
"They tried to be too detailed, and ended up making it very difficult to distinguish between a good transfer and a bad one, because what it actually said was a warning sign would mean somebody had to go for guidance before they could transfer because of the presence of overseas investments.
“That's just mad, because there are overseas investments in almost everything. What we wanted was the trustees to be able to relook at where the money was being sent, and to make a judgement on whether the overseas investments were risky or not. But you can't really put that into regulation because it becomes too broad and catches too many things unintentionally."
Snowdon wanted to see new regulation centred around allowing trustees and providers to exercise their judgement when it came to refusing a transfer or not.
“We need trustees to be trusted as well as providers, they need to be given the power to do that,” she added.
Snowdon said within the current regulatory framework all providers and trustees could do was their best.
She explained: “What we're unhappy about is trustees and providers have to make a choice to follow the law, which is very black and white, or whether they use their own common sense and put themselves at risk of being seen to have broken the law.
“At the moment, they can just do their best, but the legal position is that if there's any suspicion at all, they have to send a case off to the guidance service before the transfer can be made. And that's just not helpful but all we can do is say to trustees is balance up the risks. And put your best foot forward. We just need the law to help us to do that.”
