International technology firms should be held responsible for their role in allowing pension scams adverts to appear on their platforms, the Work and Pensions Committee (WPC) has said.

Following its first investigation into protecting savers five years on from pension freedoms, MPs stated that legislation was needed to stop tech giants, such as Google, “profiting from a multi-billion-pound scam industry”.

The WPC said that regulators were powerless to hold search engines and social media platforms to account for hosting scam adverts, and described tech firms that were accepting payments to advertise scams and further payments from regulators to publish warnings as “immoral”.

The report - Protecting pension savers—five years on from the pension freedoms: Pension scams - urged the government to act “quickly and decisively”, noting that pension freedoms had put savers at risk of a “much wider range” of scams and fraud.

The scale of pension scamming was likely to be underestimated, it continued, warning that the situation was likely to get worse as the pandemic offered scammers new opportunities.

"The pension freedoms brought more choice for savers on how to use their pension pots, but the reforms have also opened up a whole new world of opportunity for scammers and fraudsters,” commented WPC chair, Stephen Timms.

"At the same time, a woeful lack of online regulation has helped them reach more people than ever before.

"The result is an online free for all, where scammers can advertise with impunity while the tech giants line their pockets from the proceeds of their crimes.

"With global firms such as Google being increasingly influential as providers of information, consumers looking for financial advice are being let down by not being afforded the same level of protection they receive from adverts which appear on television or in a newspaper.”

MPs also called on the government to rethink its decision to exclude financial harm from the forthcoming Online Safety Bill, and use it to legislate against investment fraud.

Furthermore, the WPC warned that the “fragmentation” of reporting, investigation and enforcement has made combating scams more difficult, and called for the multi-agency taskforce set up to tackle pension fraud to be strengthened.

It also said that Project Bloom should be renamed the Pension Scams Centre, and be given funding and staffing to manage an intelligence database and law enforcement.

Finally, MPs called on the Financial Conduct Authority (FCA) to “raise its game” and publish enforcement action information, after they received “numerous” criticisms during the investigation that the regulator was not effective in stopping scams, punishing scammers or retrieving money lost to scams.

In response, an FCA spokesperson said: “We welcome the WPC report into protecting pension savers and appreciated the opportunity to give evidence. We will consider the recommendations made, along with our partner authorities. Tackling scams is a priority for the FCA and we have dedicated considerable resources to it over the last few years in both prevention and pursuit. 
 
“We share responsibility for disrupting these scams with other regulators and law enforcement, and will continue to work with any and all bodies involved in fighting fraud and scams to prevent further harm to consumers.”

"There must now be parity across the media to ensure all adverts are regulated and the government should use its Online Safety Bill to act,” Timms continued.

"Tighter online regulation must be just the first step in improving protections for savers. Stronger enforcement with a new Pensions Scams Centre, a more effective FCA and extra support for victims are also desperately needed.

"Pension scams can cause huge financial harm and psychological distress and any one of us saving for the future is at risk of falling prey to a scammer.

"The government and the regulators have been left playing catch-up following the pension freedom reforms and must now act quickly to protect savers and their hard-earned money."

This investigation was the first part in a three-part inquiry into protecting savers, with the second part focusing on accessing pension savings current underway.

The third and final part will focus on the issues around saving in later life.

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