Global tech firms such as Google should be held to account for hosting pension scam adverts with legislation needed to stop them profiting from a multibillion-pound scam industry, MPs say today.
A report from the Work and Pensions Committee calls on the Government to "act quickly and decisivel"’ to protect pension savers.
The report warns that commonly cited figures on the scale of pension scamming are likely to substantially underestimate the problem. The situation is likely to be getting worse rather than better, states the report, with the Covid-19 pandemic offering scammers new opportunities.
The Pension Scams Industry Group estimates that £10 billion has been lost by 40,000 people to pension scams since 2015.
The WPC says that the reputation of Action Fraud, the UK’s national centre for fraud and cybercrime, has been left ‘in tatters’ by its failure to manage the expectations of victims and a lack of action on cases. The Financial Conuct Authority also comes into criticism for repeated failures in stopping scams, punishing scammers or retrieving scam proceeds.
The Committee heard throughout its inquiry that pension scammers have moved online, with regulators powerless to hold search engines and social media to account for hosting scam adverts as they do traditional media. Tech firms such as Google are accusedd of accepting payment to advertise scams and then further payments from regulators to publish warnings - a practice the Committee describes as ‘immoral’.
The report also calls for the multi-agency task force set up to tackle pension fraud to be strengthened. The existing Project Bloom should be renamed the Pension Scams Centre and given dedicated funding and staffing to manage an intelligence database and law enforcement. Currently the fragmentation of reporting, investigation and enforcement has made tackling pension scams more difficult, MPs on the Committee say.
Stephen Timms MP, chair of the Work and Pensions Committee, says: “The pension freedoms brought more choice for savers on how to use their pension pots, but the reforms have also opened up a whole new world of opportunity for scammers and fraudsters. At the same time, a woeful lack of online regulation has helped them reach more people than ever before. The result is an online free for all, where scammers can advertise with impunity while the tech giants line their pockets from the proceeds of their crimes.
“With global firms such as Google being increasingly influential as providers of information, consumers looking for financial advice are being let down by not being afforded the same level of protection they receive from adverts which appear on television or in a newspaper. There must now be parity across the media to ensure all adverts are regulated and the Government should use its Online Safety Bill to act.
“Tighter online regulation must be just the first step in improving protections for savers. Stronger enforcement with a new Pensions Scams Centre, a more effective FCA and extra support for victims are also desperately needed. The Government and the regulators have been left playing catch-up following the pension freedom reforms and must now act quickly to protect savers and their hard-earned money.”