Action Fraud received 637 reports of pension scams in 2020, of which 545 were passed out to UK law enforcement for further action.

Speaking to the Work and Pensions Committee (WPC) on pension scams, City of London Police national coordinator for economic crime, Commander Clinton Blackburn, noted that although reported pension fraud had been steadily decreasing since 2015, there had been a “slight upward trend” in 2019/20.

“The pension scam data is a subset of a much bigger problem,” he continued. “In the past 3 years we’ve seen losses of £30.8m. Pension scams are often reported as investment fraud and investment fraud is increasing as a result of the pandemic.

“In 2020 we saw nearly 19,000 investment frauds reported to Action Fraud.”

When asked whether the Pension Scams Industry Group’s (PSIG) suggestion that billions of pounds are being lost to pension scams was plausible by WPC chair, Stephen Timms, Blackburn said: “It is plausible, it’s just not being being reported to ourselves through Action Fraud to capture that correct data with what they’re reporting."

He added that online scams and the use of social media platforms to commit fraud were increasing, although the true scale of the problem was uncertain due to under reporting.

Financial Conduct Authority (FCA) executive director of enforcement and market oversight, Mark Steward, concurred: “A significant driver is the increase in online marketing of what look like genuine opportunities but are fraudulent or scam-like. We’ve seen a significant increase in the last 12 months.”

Steward stated that the increase coincided with people spending more time and at home due to the pandemic and the opportunity for savers to be attracted top fraudulent investment offers online was “very real”.

“Combined with the fact that there is no regulation around social media and advertising in social media, we see that as a significant driver in the increase in online scams,” he added.

“It’s very easy for a scammer who, in the old days, might have to set up quite a sophisticated outfit of glossy brochures, office fronts, people, the appearance of a legitimate business. All they need now is an online advertisement that can be created very easily.

“The way social media works is there is an automated straight-through processing of the advertisements so you can industrialise this process and run multiple advertisements. This has increased the temptation and opportunity. We are trying to address this.”

The Pensions Regulator (TPR) executive director of frontline regulation, Nicola Parish, noted that the average amount lost to pension fraud was £82,000 and said the regulator wanted to see more of the industry sign up to PSIG and TPR’s code of practice.

The panel noted that scammers’ techniques were developing and that fake comparison website were “a new gateway” into investment fraud.

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