Transfer scam ‘red flag’ reporting increases significantly

The number of pension transfers with reports of scam ‘red flags’ has increased by 21 percentage points over the past year, according to XPS Pensions Group.

XPS found that the amount of transfers it conducted that identified indications of possible scam activity increased from 13 per cent in June 2018 to 34 per cent in June 2019.

It highlighted that the recent scam awareness campaign has helped improve member understanding and, in turn, increased the amount of ‘red flag’ reporting.

After speaking to members, XPS identified the key ‘red flags’ were a lack of awareness around fees, confusion around the independent financial adviser process and misunderstanding the transfer process.

Most cases did not turn out to be scams, but XPS noted that “an increased recognition of warning signs is a positive step forward”.

Commenting on the findings, XPS Pensions Group principal, Wayne Segers, said: “Over the last year we have seen a big increase in the number of warning signs being identified for potential scam activity on pension transfers, from one-in-eight in June 2018 to one-in-three in June 2019.

“Fortunately, not all turn out to be scams but it is good to see an increased understanding of the warning signs.”

In the twelve months up to 31 May 2019, XPS has handled 969 member transfer cases, representing transfer values totalling £214m, which means that it has identified possible scam activity on £73m of pension savings.

Segers added: “Pension schemes need a system to identify scam activity, such as our specialist telephone service, however it is also important that schemes help their members better understand their pension entitlements and the fees that they could expect to incur.

“This will reduce the opportunities for scammers to trick them.”

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