The Pensions Scams Industry Group (PSIG) has launched an Interim Practitioner Guide, detailing the key due diligence steps that pension practitioners should undertake when assessing a pension transfer.

The interim guidance reflects the position following the 2021 Department for Work and Pensions' (DWP) regulations on transfers, although further updates are expected to be made to the guidance following the government's review of the regulations this year.

In particular, the guidance provides further clarification around overseas transfers, clean lists, and statutory and discretionary transfers, emphasising that, where the risk of scam is low, the preference is to make the transfer request "as quick and easy as possible".

The guidance was welcomed by Pensions Minister, Laura Trott, who highlighted the guide as a "great asset for pension practitioners and help further our collective efforts to stamp out scams".

“We’re continuing to work side-by-side with industry, regulators, and law enforcement to stop scammers in their tracks and to ensure pension savers are armed with the tools they need to spot duplicitous fraudsters," she stated.

Speaking to PensionsAge, PSIG chair, Margaret Snowdon, also emphasised the need to balance actionable steps with an overly prescriptive approach, noting that the group didn’t want to “inadvertently encourage people to break the law”.

“We need to be very careful that everything in the guidance is compliant and it's setting out the way to do things and the risks involved in doing some approaches versus others, particularly, for instance, calling out things like using a clean list to save a bit of time and effort," she continued.

“We like to think it is very practical, it's not telling you to do this followed by that, but it does set out very clearly what you need to do.”

Balancing resources

Indeed, despite concerns around the resources and time it may take to set up such clean lists, Snowdon clarifies that “they can cut a lot of time out”, emphasising that the regulator and DWP are supportive of clean lists.

“If you process a lot of transfers and don’t have a clean list, the more time you're going to spend dealing with each and every transfer," she warned. "So, putting the effort in now to compiling a list of schemes that you trust would save a lot of time, and it would also save you a lot of hassle in the future, because if you transfer without a clean list and you don't do the due diligence on a scheme that you transfer to, it could all come back and bite you.

“I know full well that companies, schemes and administrators, have a hell of a lot on their plates. But this this guide is intended to try and make it easier for them and enable them to take more pragmatic steps then just trying to do everything all at once.”

Snowdon acknowledged, however, that a clean list may not be the right approach for smaller schemes that do one or two transfers a year, as the maintenance wouldn’t really be worth it, suggesting that they may be better off doing regular checks as they go.

“But for bigger operations, a clean list as a way to fast track the majority of transfers is the way to go,” she clarified, raising hopes that in the future, there could even be a route to a “national clean list”, although she acknowledges that there are still some concerns around this idea and ensuring it appropriately maintained.

Keeping up to date

Further updates are expected in future, as Snowdon explained that PSIG originally intended to update its Code of Good Practice and its related documents to coincide with the regulations, after a few clauses in the regulations introduced some confusion.

"After months of debate and consideration, we decided to update and publish one part of the code, the practitioner guide, on an interim basis and amend the full code once the regulations are clarified following their formal review by the DWP."

Snowdon also revealed to PensionsAge that she expects to have recommendations for the government’s review of the regulations “certainly by early summer”, suggesting that PSIG will look to provide further updates at this point, whilst the interim guidance is designed to “let people get on with what they need to for the next few months”.

“It’s a significant document, and we intend people to use this guidance while waiting for the whole code to be revised, probably by the end of the year,” she stated.

“If everything goes swimmingly, then we should be aiming for the end of the year to publish the whole updated code, and that will look to make it pretty clear going forward as to what to do about pension scams.”

Commenting on the updated guidance more broadly, Snowdon stated: stated: “It's been thousands and thousands of manhours, trying to work out the best way to deal with the changes and satisfy everybody's needs by making it as easy and straightforward as possible, but also compliant with regulations and ensure we’re all doing the best we can for our members.

"Putting this guide together has been quite a task – PSIG is a voluntary, multi-disciplinary, industry group so there have been several different views on how best to reflect the regulations and differing industry practice to take into account.

"I am so grateful to our team and to our reviewers for the thousands of man hours given so generously."

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