At least 12 per cent of transfers could have been blocked over the past year if new anti-scam regulations had been in force, according to analysis from XPS Pensions Group.

The research found that only 2 per cent of past transfers would have satisfied the first condition included under the regulations, with the majority therefore subject to the second condition, which focuses on identifying specific warning signs of a pension scam.

However, it also revealed that one in two of transfers that could have proceeded exhibited at least one scam warning sign, with XPS therefore emphasising the importance of considering a wider range of warning signs than those included in regulations.

The group also pointed out the subjective nature of some flags, such as determining whether a fee is high, which will require trustees to consider how the assess some of the flags, although The Pensions Regulator has provided guidance to support on this.

Despite this guidance, the firm warned that the need for trustees to immediately put in place robust measures to assess whether a transfer presents any of the red or amber flags identified in the regulations was likely to be “very challenging”.

XPS Pensions Group head of member options, Mark Barlow, commented: “We welcome the strengthening of the transfer regulations and our experience suggests that that they will make a real difference in the fight against pension scams.

“However, satisfying these regulations isn’t a guarantee that a transfer isn’t a scam and so trustees should look out for wider warning signs, such as a member in good health being told they can access their benefits before age 55.

“Trustees need to act immediately to decide how they will assess the flags and to put in place an efficient and effective process to obtain the information from members.

“They should also let their members know as soon as possible about these additional checks and the circumstances in which their transfer may be blocked so this does not come as a shock.”

Adding to this, XPS Member Engagement Hub client lead, Helen Cavanagh, argued that it is "critical" for trustees to "immediately review" what their administrators currently do and what gaps they need to fill to satisfy the regulations.

“These regulations are going to require trustees to gather more information directly from members," she continued. "Our experience is that speaking directly to members is the only reliable way of collecting this information.”

Share Story: