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Govt refuses to intervene as High Court ruling sparks pension liberation concerns

Ros Altmann

Pensions minister Baroness Ros Altmann says the Government will not legislate to stop pension scams as providers face renewed pressure to transfer savings to suspected liberation schemes following a controversial High Court ruling.

Last month the High Court overturned a Pensions Ombudsman decision that sided with Royal London over a suspicious £8,000 transfer to a SSAS in 2014.

Lawyers warned the ruling could open the floodgates as scammers and savers use the verdict as proof their transfer requests should be approved.

Now Aegon and AJ Bell report they are dealing with a fresh wave of enquiries.

AJ Bell technical resources manager Gareth James says: “There is a danger that pension fraudsters are exploiting the relative ease with which SSASs can be established to con people out of their hard earned savings.

“As a minimum, we’d like to see the requirement for all SSASs to have a professional trustee to be reinstated, which would make things significantly harder for fraudsters. We’d also like to see a change in the law around the statutory right to transfer so that it gives the transferring scheme the power to resist transfers where there is a clear risk of client detriment.”

But speaking to Money Marketing, Altmann says there is a limit to what the Government can do.

She says: “We are looking at how we protect consumers, there are lots of things going on to make sure we’re on top of it but you’ll never stop fools being parted with their money, you’ll never stop people trying to part others from their money.

“I’ve looked into making it illegal to cold-call someone about a pension but I don’t believe we can do that.”

Plutus Wealth Management chartered financial planner Sebastian Hurst says: “We need to build a financial services industry that protects the customer. A lot of the time transfers out of occupational schemes risk giving up guarantees or low charges.

“The vast majority of advisers are doing the right thing but there will always be people circumventing that so a second pair of eyes from the provider is welcome. I’m not happy the High Court ruled against Royal London, pensions are such an important asset for clients.”

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Comments

There are 9 comments at the moment, we would lover to hear your opinion too.

  1. It is funny but I thought that fraud was against the law so the link in this way is surely something in which the ‘government’ or the Fraud Squad would be interested? This is before I move onto protecting the consumer and orderly market behaviour and such like but clearly I have missed something in translation… And of course, we advisers should then be there to step-up to the plate and compensate these unfortunate people who lose their pension life savings, through introducing extensions to the FSCS’s remit to incorporate unregulated entities like those.

    • Oddly enough, the way to deal with fraudsters is to arrest and prosecute them. Not to give extra powers to protect large Life Companies from their consumers and small competitors who in 99% of cases are nothing to do with fraud.

  2. Ah here we are: all roads lead back to the old dears in the old industry wanting their coveted ‘pensioneer trustee’ status back. HMRC already require each and every pension scheme to have a ‘fit and proper’ administrator to ensure tax compliance, and its time these rent-seekers belted up.

    God only knows why Ms Hughes wants her £8k in a SSAS to put it at risk like this. But after all this time, we should accept that she wants it and its her money. She had a legal right to take a transfer value instead of a Life Company being able to keep it. The real scandal here is the way that Life Companies lobbied the Pensions Ombudsman to invent requirements on the statutory right to a transfer that simply were not in the Statute.

    The real bonus of the law of the land being reasserted like this is that all those genuine cases where people now wish to use SSASs for genuine business reasons, and all those professional SSAS administrators out there can now get on with business without Life Companies doing their damnedest to stamp on small competitors.

  3. Interesting arguments both sides, ultimately we are now being asked to accept that clients know what they are doing and accept responsibility for their decisions. As long as we do not end up paying for the frauds then Caveat Emptor should apply, if you lose your money do not expect any compensation for your own stupidity or greed.

  4. I bet Sebastian Hirst hasn’t actually read the judges summing up. If he did, he probably would not be sticking up for the insurers. Read the judgement and then comment as MIB and I have. I think Miss Hughes is doing the wrong thing and knows it, but a judge will side with the law and her right to be silly.
    Insurers are STILL dragging their feet (Scottish Widows) on legitimate PPP switching to SSAS for commercial reasons, despite the clear decision of the court.

  5. If these people do not take regulated advice before transferring then that is their prerogative and doesn’t concern me. What does concern me is that we as regulated advisers are made to pay for their stupidity, that is just damn right unfair. That is the issue that should be legislated against

  6. I think Mr Milton hits the nail on the head

  7. Problem is this, if people have the freedom to be scammed, will FOS still demand they get compensation.

  8. Gordon Sinclair 18th March 2016 at 12:01 am

    Its quite simple really. If provider tells client that an transfer doesnt look right but client demands transfer anyway the client should take responsibility for any tax charges payable by them and / or the Scheme Administrator.

    If there is no comeback on the Scheme Admin or Trustees on insistent client cases then I would imagine providers wouldnt drag their heels so much.

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