Under one third of pension fraud investigated by police amid UK scam crackdown

Following the announcement that the government has launched a fresh plan to tackle fraud, new figures obtained by Quilter show that just 29% of pension fraud reports are sent for police investigation on average.

The figures from a freedom of information request demonstrate that over the last eight years less than a third (1,173) of the nearly 4,006 pension fraud reports submitted to Action Fraud were disseminated to local police forces for investigation by the National Fraud Intelligence Bureau (NFIB), which sits alongside Action Fraud.

The government's new fraud strategy includes introducing a suite of new measures such as launching a new National Fraud Squad led by the National Crime Agency and the City of London Police and investing £30 million in a state-of-the-art reporting centre, among other actions.

Reports this morning (3 May) suggest the government is to ban cold calls on all financial products as part of a crackdown on scams. In addition, a new 400-strong ‘fraud squad' will be established to target scammers. (Source: What the Prime Minister's Fraud Strategy means for you - GOV.UK (www.gov.uk))

In some years the number of pension fraud reports to Action Fraud that were sent to the police for investigation was as low as 6%. However, in 2020 when the pandemic hit it rose to 66%. It is unclear how many of these ended up with a conviction.

According to Action Fraud some losses can run into the millions, but the average loss to each victim is around £75,000. However, finding an accurate average can prove difficult as many victims are unaware they have fallen victim to a fraud.  

Pension scams are extremely complex, require considerable police resources to investigate, and in many cases are only discovered years after the event. It can often take years of information gathering and investigatory time before the police get to the point of prosecution.

This means that Action Fraud and the investigatory agencies are forced to prioritise the cases they believe can lead to a successful criminal justice outcome. For the vast majority of pension scam cases, the chances of reaching this stage are slim. 

In light of difficulties in investigating pension scams, Quilter today (3 May) urged government to do more to tackle the threat of scams by making it harder for the criminals to operate and reach potential victims.  

To do this, Quilter pushes the government to make faster progress with the Online Safety Bill, which was due to have already been introduced to Parliament but continues to be delayed with numerous amendments.

The creation of this Bill means search engines and social media platforms will have a legally enforceable duty to remove suspected scammers and scam adverts immediately on notification and improve their due diligence process so that it becomes much harder for scammers to market investment products using paid adverts.

Jon Greer, head of retirement policy at Quilter, said: "Unfortunately, especially during economically difficult times, scammers thrive as hard-working people get their heads turned by too good to be true deals. These figures show that over the past few years, as finances have been stretched, many more scams have had to be passed on to local forces for investigation. This shows why it is important that the government's new strategy gets a grip on fraud.

"Sadly, because pensions are for the long term it can be years before victims realise they have been scammed and their money has gone. Once they are uncovered pension scams are extremely complex, they can span multiple jurisdictions. This all makes investigating the scams incredibly time consuming and expensive, which is why the police have to prioritise those few cases where they have a chance of success.

"The pension transfer regulations brought in 2021 have had a positive impact on highlighting scams. However, even with those regulations in place scams are still being perpetrated making the Online Safety Bill an important piece of the puzzle.

"Getting retribution for a pension scam can be tricky so we should be going to the root of the problem and that starts with getting the Online Safety Bill over the line. The government continue to risk people losing their life savings while this legislation stalls."

Cold call ban on all financial products 

Tom Selby, head of retirement policy at AJ Bell, was one of the earliest and most vocal campaigners for a pensions cold calling ban in the UK. That cold-calling ban was eventually introduced in 2019.

Selby said: "Financial scams are a scourge on society and ruin lives, so any move to protect more consumers from different types of fraud is extremely welcome. Governments cannot stop scams altogether, but they can place significant barriers in the way of those intent on committing fraud. 

"According to UK Finance, an estimated £1.3 billion was stolen through financial fraud in 2021. These scams will often begin with an unsolicited approach from someone via phone, text message, email or on social media.

"For this cold-calling crackdown to work we need two things: tightly worded legislation, to ensure nefarious contacts are specifically targeted, and a legitimate threat of enforcement where someone breaks the new rules. The plans also need to go hand-in-hand with greater responsibility being taken by internet giants like Google for paid-for scam adverts, something which the Online Safety Bill can hopefully bring into UK legislation.

"The successful campaign to ban pensions cold-calling in 2019 was never supposed to be just about pensions. We have always warned that the vast majority of fraud takes place outside of pensions, usually in the form of investment ‘opportunities' that turn out to be at best missold and at worst entirely non-existent. 

"The ban on pensions cold-calling therefore needed to be seen as the beginning of a wider effort to tackle scams more generally and beef-up education. The pandemic and the subsequent cost-of-living crisis have both resulted in rising vulnerability in the UK which, depressingly, is like blood in the water to fraudsters. The pandemic in particular has also, understandably, likely meant progress in tackling scams has not been as fast as some would have liked.

"The grim reality is that, even with new rules and tough enforcement, scammers will continue their attempts to plunder people's hard-earned savings. It is therefore vital, regardless of what the government does, that Brits keep their wits about them and are cautious when they are contacted out of the blue by someone they don't know about their finances. Much of this is common sense, but it could save you from financial misery."