The Pensions Scams Industry Group (PSIG) has urged the industry to advocate for the fair treatment of the Ark Pension Schemes victims and push for necessary reforms.

In a paper, written in response to Dalriada’s recent communication, PSIG chair, Margaret Snowdon, argued that although the announcement prepared by Dalriada was factually correct, it was set against a background of "confusion and misinformation" and a “desperate” need by victims to understand what will happen to them, resulting in members of the Ark Pension Schemes being worried about the income.

“Now the Fraud Compensation Fund (FCF) has concluded that dishonesty led to the huge losses in the Ark Schemes,” she explained.

“Reasonable belief that fraud took place is essential to be eligible for compensation and calculations are under way to assess those losses to the Ark Schemes.

“The calculations are set out in legislation and can’t be altered but are complicated by the fact that some scheme members received loans from certain schemes.

“The charges have been unresolved for over a decade and hanging like a sword above members’ heads.”

Snowden noted that Dalriada is assisting HMRC in calculating individual tax charges, with HMRC starting collection activity in September 2024, while the final calculations will be completed and transferred to Standard Life in the first half of 2025.

“Any compensation paid by the FCF will be paid to the scheme, not to the individual members of the scheme,” she added.

“The compensation will not include normal everyday scheme management charges or investment losses, which is unfortunate, given the time taken to get to this point, but the legislation simply does not allow it.

“The compensation to the scheme is also reduced by the amounts that the individual members received in loans. This is because those amounts were not “lost” but paid out to members.”

She suggested that it was “impossible” know yet what victims will receive, noting however, that they will not receive cash, but will instead be granted a pension fund with Standard Life based on a proportionate share of the overall compensation less any loan amounts already received.

Snowden said: “The only victims to pay a tax charge to HMRC are those who declared (either on tax returns to HMRC or by telling them in some other way) that they had received a loan as part of the transfer to the Ark Scheme.

“Those who did not declare are not penalised, which is unfair.”

Given this, Snowden argued that victims should not be blamed where dishonesty by scheme managers or agents results in losses to a scheme or individuals, unless there is evidence of their complicity in the fraud.

She argued: “HMRC should redefine unauthorised payments to exclude payments paid to incentivise an individual transfer to a scam arrangement, where that payment is returned to the scheme or offset against future scheme benefits.

“HMRC should treat victims with respect and empathy and assume innocence until proven otherwise. A victim’s rights and obligations should be clearly explained to them.

“HMRC should waive interest charges while a tax charge remains 'protective' pending a final determination and should be bound by a time limit to collect tax and not use devices to keep matters ticking on without finalisation.

“Four years after the tax year of the event should be sufficient to establish the validity of a charge.”

---