Regulations introduced to combat scams should not present a resource issue for pension schemes but more work is required, particularly on information sharing and online scams, according to Pension Scams Industry Group (PSIG) chair, Margaret Snowdon.

Speaking at the Pensions Age Autumn Conference 2021, Snowdon said that the industry has secured the “greatest prize” in the regulations, which “answer the call” for trustees to be able to halt a transfer that shows signs of a scam and are expected to be published "soon".

“It’s quite subtle, but its actually saying that there is no statutory right under certain circumstances”, she said, confirming that these circumstances will be “reasonably straightforward”.

She continued: “It should stop the majority of bad practice, it won’t stop all bad transfers, that aren’t necessarily in the members’ best interest, but it’s not our job to try to second guess every single thing that somebody might want to do, because we don't know the circumstances.

“An important caveat is you're still able to pay a transfer value If you want to, regardless of what kind of savings you see, and that's quite dangerous, and a lot of people probably won’t like that flexibility, but trustees do have discretion under scheme rules.

“One thing I would say though is you have to document it very carefully, because if you don't know that individual could then come back and say you used your discretion, and I challenge you on that.”

Equally, Snowdon warned that the regulations will not act as a “free pass” to not make any transfers at all, explaining that members could also come back to challenge pension schemes on this decision .

She said: “Some transfers are very easy and very straightforward, those are the ones that you can not waste scheme time on.

"It does rely on judgement, but that’s what trustees do every day, they apply judgement and act reasonably, and if you act reasonably and in line with the regulations, then The Pensions Ombudsman is likely to be more sympathetic to you

“If you think that going forward with the new regulations that you have to do further due diligence on every single transfer, then you’re wrong, you don't need to do that."

Instead, Snowdon explained that if a scheme has already done due diligence, and as long as this is kept up to date, then they can "happily pay transfers to that same source".

"You shouldn't end up having to do thorough due diligence on everything if you want to stop scams," she continued, "because as I said it's only 5 per cent of schemes that are likely to be scams, so what we’re asking through the regulations and the code is to check the worst of them and catch that 5 per cent."

However, Snowdon warned that there is still much to do, particularly as "transfer values and transfers are increasing again, so I’m saying that you’re going to see a lot more activity on the scams prompt as well."

In particular, she noted that whilst PSIG has established the Pension Scam Industry Forum, a pension scam talking shop with around 70 pension organisations, this is “kind of small against everything that’s happening”.

“We want to do more intelligence sharing because if you don’t know who the bad guys are its difficult for you to have to reinvent the wheel every single time," she said, emphasising that a central information hub should be available to all organisations.

"That means greater security across the database but we should share information. An intelligence databases is an important thing."

“One of the most vital is one that's been kicked into the long grass that road is trying to stop online financial scams,” she added, continuing: “Most of the scam approaches are coming through social media, through search engine, through cloning, so there's a lot of stuff happening on the internet.

“At the moment all that's happening is the recommendation has been passed to Department for Digital, Culture, Media & Sport (DCMS), who will then issue a consultation.

"So it will be at least 2 years before we've actually got something concrete to stop online scams, and we need to keep a look out as much as we can at what scammers are up to, but it makes it much more difficult for us.”

In addition to this, Snowdon suggested that artificial intelligence (AI) is likely the next thing to affect scams, with AI already finding victims "very easily" via algorithms.

"So we will be fighting machines as well as very clever people, and I think we need to be on the lookout for that, so that will be where some of PSIG's focus goes in future," she concluded.

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