The various responses from the trade and  national press demonstrate what a mess we have got ourselves into trying to protect people from combining  their pension pots.

Guy Opperman made it clear this time last year that the DWP’s intention in legislating for protections was not being carried out and that the abundance of red and amber bunting being chucked at savers was causing as much trouble as it solved.

As the headlines proclaim, the statistics pumped out in the DWP’s report on the matter are being variously interpreted as

• a vindication for the behviour of overseas advisers ,
• leaving  vulnerable savers on a MaPS waiting list  ,
• working ok but could do better and
• back to the regulatory drawing board,.

The attempt to regulate non-advised DC to DC transfers has resulted in farcical situations where people have turned up for interviews with MaPS with no idea of what they are there for and for MaPS to be equally clueless. Most red flags seem to have been thrown because customers have expressed disbelief that they can’t more their money from one authorised pension scheme to another – a double yellow for dangerous play and subsequent dissent.

This appears to be the DWP position on the matter

In the 290,000 transfers the DWP looked at, 2,400 transfers were given an amber flag. The most common reason was the inclusion of overseas investments in the receiving scheme.

In total 300 red flags were raised. In almost half the cases (47%) this was because the customer had failed to provide the right information. And in a further quarter (26%) because the customer hadn’t provided evidence that they had attended a MoneyHelper appointment.

The DWP said it will continue to work with the industry to resolve areas where transfer requests are being delayed or blocked, especially where an amber flag is raised because the scheme includes overseas investment. And where a red flag is raised because the scheme offers an incentive.

Over the last 18 months, the waiting time for a MoneyHelper safeguarding appointment has gone up from 2 weeks to 6 weeks.

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Are we really dealing with the fraudsters?

My suspicion is that there is no resource to bring fraudsters to justice, that many of the incidents reported as fraud were well-intentioned but breaches of the complex regulations and that we are now in that most awkward of messes that the right thing to do “combine pension pots” is turning into the wrong thing to do “helping people to combine pension pots”.

With insufficient advice and guidance to go round, most people with small pots are doing the best they can by following the financial promotions made by the likes of Standard Life and Pension Bee. So long as taking money from institutional to retail products is considered a poor choice , we will continue to see trustees and their administrators finding reasons to throw flags

In its conclusion, the DWP said the initial policy intent of the regulations remains appropriate and that

“it is estimated that the regulations have stopped approximately 2000 transfers taking place which may have been scams/fraudulent”.

In all this investigation , something is missing. Is there any evidence among the 290,000 transfer requests looked at that anyone is actually being scammed?

Having read the DWP’s paper – link here I now have closer inspection of how this 2000 figure was arrived at. Footnote 15 , suggests that it is an extrapolation of a much smaller number of potential frauds – identified as “red flags”. So who is behind the potential fraud?

Are red flags being referred to action fraud? Are they being investigated by the FCA? Is anything being done about suspect transfers? I suspect not/

If nothing is being done about the people behind these supposedly fraudulent transactions, then we might conclude that these supposed fraudsters continue as a menace to pensioners. An alternative conclusion is that there is insufficient evidence to merit any further action, let alone naming and shaming

Transparency is the best disinfectant and if the regulators have  the evidence, why don’t they warn us public who we should be avoiding?

I suspect that the vast majority of amber and red flags are a huge embarrassment and that resource would be better employed ensuring that all authorised pensions are value for money and that anyone looking to transfer authorised pensions to an un-authorised scheme , is immediately investigated , prosecuted and warned off.