Giles Watling, MP for Clacton, has written to the Financial Conduct Authority (FCA) to seek information on the implementation of new protections to tackle pension scams.
The Police Foundation recently published a report estimating that more than £2 trillion of savings is at risk from pension scams. The report described pension companies as the “gatekeepers to funds sought by scammers and as such, have a role in ensuring that their customers get the knowledge and information they need to protect themselves”, noting gaps in the provision of protective measures at the frontline.
In an effort to protect savers from scams, the FCA will soon make rules to implement important clauses from the Financial Guidance & Claims Act (2018), which have the aim of ensuring savers first use Pension Wise before accessing their pension savings. However, a significant amount of time has passed since the Act became law, and these clauses need to be implemented as a matter of urgency, especially given the additional financial pressures created by Covid among many people who are approaching retirement.
That is why Giles has written to Christopher Woolard, Interim Chief Executive of the FCA, to ask for an update on the intended timescale for bringing these important rules into operation. Giles has also asked for an indication of the level of Pension Wise take up the FCA hope to achieve through this policy, and for an assurance that these rulemaking responsibilities are being handled with the urgency they deserve.
For savers over the age of 50, Pension Wise services can be accessed here: https://www.pensionwise.gov.uk/en
“In the last six months I have had a range of contact from constituents whose experiences demonstrate the validity of the concerns expressed in the report from the Police Federation, including investment scams and a romance scam. The Clacton constituency has around 12,700 people who are aged 55 to 64 and I worry that many will not know about, or make use of, the support and protection available to them under the pension freedoms.
“Many of these people will have defined contribution pensions and are eligible for the government’s Pension Wise guidance service from age 50. Yet I was disappointed to find that the FCA’s own estimates suggest only a minority of savers, around 15%, are using the service before making important decisions about how they choose to access their pension benefits. I would encourage all local residents who are eligible to engage with the Pension Wise services.
“As this service was specifically intended to help savers understand their options and learn how to avoid known risks such as pension scams, it seems a missed opportunity that so many people who are clearly likely to benefit from this service are not using it. Especially when the consequences of poor decision making can be so profoundly harmful to people’s wellbeing in retirement.”