Many trustees are unsure whether new rules aimed at preventing pension scams will be effective, according to a new survey.
Specialist pension law firm Sacker & Partners found that while half of the trustees surveyed (49 per cent) welcomed these new rules, believing they will reduce the risk of the scams, a similar proportion (47 per cent) said they were unsure what the outcome would be for pension schemes and their members.
These new statutory transfer regulations put the onus on trustees and and pension scheme administrators to protect members from scams, by asking them to assess ‘red flag’ and ‘amber flag’ warnings on transfer requests and then take appropriate action. This could be delaying a transfer request or seeking further information from the member.
Sackers partner James Bingham says: “The new regulations seem to be casing a split reaction in the industry with half of respondents believing they will help reduce the risk of scams, and 47 per cent waiting to see what the reality holds for them and their members.
“As is often the case with new regulations that are rushed in, as these were, there are grey areas that are likely to give rise to increased confusion, conflict, and claims.”
He adds: “One of the most significant challenges that trustees will face are the subjective judgements that they and their administrators will have to make to assess the red and amber flags. These decisions will not always be straightforward, and the disconnect between the general guidance and prescriptive regulations has the potential to make them more challenging.
“Add in the possibility of member dissatisfaction due to delays, requests for evidence and referrals to Money Helper, and claims companies have their perfect storm.”
But Bingham says there are steps trustees can take to help them embed these new rules and offer better service to members in the long term. “Managing member expectations through carefully crafted communications and accurately recording and evidencing every decision is critical. Adding in a carefully monitored and accurate ‘clean list’ of receiving schemes will help accelerate the process and mitigate complaints too.” He said research suggested that 67 per cent of respondents were already operating such a list.
He adds: “It’s clear that the onus for the implementation of the new transfer regulations is very much on trustee shoulders, but good decisions and updates to processes will help them navigate the new regime.”