New anti-scam measures prompt capacity concerns

MoneyHelper could be "overwhelmed" by demand if pension scheme trustees take an “ultra-cautious” approach when categorising pension scheme transfers under new anti-scam regulations, LCP has warned.

The consultancy said that it is unclear at this stage how pension scheme trustees and pension providers will respond to the new rules, which come into force on 30 November but were published less than three weeks ago.

The concerns were raised in response to a recent parliamentary answer from Pensions Minister, Guy Opperman, which LCP argued gave little indication that the Department for Work and Pensions (DWP) is prepared if a large volume of cases are referred once the system is up and running.

In his parliamentary answer, Opperman confirmed the DWP's intention to monitor the volume of referrals to MoneyHelper and to review this within 18 months of the regulations coming into force.

He said: “The legislation will fully come into force on the 30 November. We anticipate that accurate data will become available after this point.

"It is the departments intention to monitor the volumes of referrals to MoneyHelper and include this in the review of the regulations I have committed to carry out within 18 months of them coming into force having worked closely with the Money and Pension Service.”

However, MP Wendy Chamberlain, who tabled the initial query, argued that this will provide “little reassurance” that proper preparations have been made by the government.

“A review in 18 months will be of little use if people struggle to transfer their money now because they cannot access an anti-scam interview because of a capacity crunch,” she said.

Adding to this, LCP senior consultant, Daniel Jacobson, warned that whilst the new rules have been brought forward with the best of intentions, there has been very little time for schemes to prepare, with volumes of referrals to the new anti-scam interviews "highly uncertain".

“Unless schemes apply appropriate due diligence, rather than simply deciding to automatically refer most cases to Moneyhelper there is a risk that large volumes of referrals could overwhelm the service and lead to delays and frustration," he continued.

“Whilst trustees and administrators should not view referring a case to Moneyhelper as the default course of action, the government must also ensure that there is capacity in place to ensure that those genuine referrals can be dealt with swiftly and efficiently and that it doesn’t become a bottleneck”.

However, the DWP pointed out that whilst the finalised rules were only published in the past month, it had previously consulted on the changes in May, providing time for trustees to prepare for the changes.

A DWP spokesperson said: “Our new transfer regulations build on existing due diligence by giving trustees and scheme managers what they have been asking for - the ability to act where they have concerns - and we last consulted on this matter in May, providing over six months to prepare for the changes.

“Any demand they create for new guidance will form part of a formal review in 18 months’ time. Additionally, we do not believe these regulations require additional scrutiny of all transfers, unless the transfer is to an occupational pension scheme or to an overseas scheme.”

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