The Pensions Regulator’s Lesley Titcomb has now officially and publicly declared that
scammers are criminals.
This begs the urgent question: why have so few – if any – of them been prosecuted? What we need now is all of the scammers behind bars and the keys thrown away. The purpose of the recently-published ebook “Anatomy of a Pension Scam”
is to get the message out there and warn the public; the financial services industry in the UK and offshore; governments; regulators; ombudsmen; crime agencies, HMRC; and the scammers that this huge financial crime will NO LONGER BE TOLERATED. The authorities who have stood by and allowed this to happen have to snap out of their complacency, laziness and incompetence, and actually take some action to bring these criminals to justice.
£11,000,000,000. That is an awfully big number. But this is what financial fraud cost thousands of victims in 2016 according to reported statistics. How much of this is down to pension and investment scams is anybody’s guess; or whether that is an entirely separate and equally horrifying number is another possibility. Either way, this does nobody any good and harms innocent, hard-working people on a huge scale. It also compromises the very principle of saving for retirement and shakes confidence in the pensions and investment industry as a whole.
Evidence suggests that in the past seven years, there have been many £ billions lost to pension and investment scams – there are no precise “official” figures. But the dreadful fact is that the scammers who were targeting victims back in 2010, continued doing it in 2011; and 2012; and 2013; and 2014; and 2015, and 2016. And they are still doing it today. Happily and profitably. And nobody has stopped them or brought them to account for the horrific financial damage and distress they have caused.
It is hard to decide which is worse: the vicious, greedy, cold-hearted scammers or the feeble authorities who let them get away with it. Repeatedly. But it has to stop. A military-style, zero tolerance campaign has to be waged against all the guilty parties until every last one of them is brought to justice.
The tragic thing about these scams and the misery and financial ruin caused to so many thousands of victims is that this disaster was preventable. HMRC were warned by the industry about the potential for scams if the role of compulsory professional trustee was removed pre 2006. In a letter of March 2004, Nick White, specialist pension solicitor warned:
“It is essential that schemes offering self-administration and wide investment choice should have in place an independent person who has sufficient control of scheme assets to prevent abuse and sufficient knowledge and experience to know abuse when he sees it.
That does not necessarily mean that the system of pensioneer trustees should be retained in its current form but, if it is abolished without an effective replacement, we envisage that within the next 5 years the degree of abuse of such schemes by both incompetent and dishonest individuals will:
- further stain the reputation of pensions generally; and
- severely embarrass the government responsible for letting it happen.
Reputable professionals in the industry and the Government share a common aim of building a system of tax rules that is simple but is robust enough to last for a working lifetime without major overhaul. Such a system needs to contain adequate protections against abuse.”
The warning was ignored. And precisely what Nick White predicted would happen, happened. And it will go on happening until and unless government, HMRC, regulators and police take responsibility for their failings and put in place robust measures to clean up the mess of the past and prevent future disasters.
Nick White’s warning was brought to my attention by Martin Tilley who is director of technical services at Dentons Pension Management. Martin has written some excellent blogs and articles on the subject of pension scams and my favourite has to be this one:
I am currently in the process of preparing a documentary series about pension and investment scams and I intend to incorporate Martin’s inspired suggestion that a scam can be acted out on screen to show the public exactly how it works. I had in mind Greg Davies to play the role of the scammer:
There are many victims who would be only too happy to help recreate the exact wording – both written and verbal – of the scammers’ pitch. In fact, the ideal case to reconstruct would be the police officer who was scammed out of his police pension and into Stephen Ward’s London Quantum scheme by FCA-registered Gerard Associates (456234) and introducer Viva Costa International. (London Quantum is now in the hands of Dalriada Trustees).
Ward has helpfully recorded his enthusiasm for Osborne’s disastrous pensions “freedoms” in a filmed interview. When asked who was better off as a result, he replied: “Everyone is better off, I certainly mean in relation to UK residents, and that’s because they are going to have greater freedom of choice in terms of how they provide their benefits in retirement age, if anyone is worse off its potentially members of defined benefit schemes, who it is likely, will not have this flexibility.” The police officer who lost his police defined benefit pension to Ward’s scam could play himself and comment on what Ward (who was definitely better off) meant by “flexibility”.