Beyond compliance: consumer duty’s impact on pension scam prevention

Despite sustained regulatory and industry focus, pension scams remain a persistent and evolving threat. Economic uncertainty, digital complexity and consumer vulnerability continue to create opportunities for fraudsters, placing heightened responsibility on trustees, providers and advisers to intervene effectively. In this environment, expectations around consumer protection are no longer aspirational, they are firmly embedded within the regulatory framework.

Consumer duty: from implementation to supervision

The FCA’s Consumer Duty has now moved decisively from implementation to supervision. It represents a fundamental shift away from process‑driven compliance towards a genuinely outcomes‑based regime, setting higher expectations for governance, culture and behaviour across retail financial services. For pension schemes and providers, this has sharpened focus on whether members are truly being protected from harm, particularly in relation to transfers, where the risk of scams remains acute.

As the FCA has consistently emphasised, Consumer Duty requires lasting changes to how firms operate, demanding evidence that good outcomes are being delivered in practice, not merely assumed.

Foreseeable harm and pension transfers

One of the Duty’s cross‑cutting rules, the obligation to avoid foreseeable harm, is especially relevant in the context of pension scams. It requires firms to look beyond procedural compliance and actively consider whether more could reasonably be done to prevent members from falling victim.

Against this backdrop, engagement with established anti‑scam initiatives has taken on increased significance. The Pensions Regulator’s call for schemes to pledge to combat pension scams is no longer a voluntary signal of good intent; it is increasingly viewed as part of demonstrating that reasonable steps are being taken to protect members. With a substantial proportion of the market having already made the pledge, those that have not may find it difficult to justify how their approach aligns with Consumer Duty expectations, particularly where harm later crystallises.

The importance of industry collaboration

Industry collaboration has become increasingly important as scam activity grows more sophisticated. The Pension Scams Industry Forum (PSIF) continues to provide a valuable platform for sharing intelligence on emerging threats, suspicious advisers, introducers and transfer patterns. In an environment where risks often span multiple firms and jurisdictions, intelligence‑sharing remains one of the most effective preventative tools available.

The Pension Scams Industry Group (PSIG) Practitioner Guide has similarly become embedded as a key reference point, supporting firms in applying the statutory transfer regulations in a practical and proportionate way. Alignment between scheme transfer processes, the Guide and the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations is now widely expected.

Governance challenge and legacy practices

Consumer Duty Champions and governing bodies are increasingly challenging whether existing procedures genuinely support good outcomes, or whether they reflect legacy approaches that prioritise defensibility over effectiveness.

This scrutiny has brought renewed focus to long‑standing business practices. One area attracting particular attention is the acceptance of insistent client cases, where a member proceeds with a transfer against explicit advice not to do so. Reconciling this approach with the requirement to prevent foreseeable harm remains difficult. Firms are increasingly being asked to explain how such models sit alongside a regulatory duty that prioritises consumer outcomes over transactional completion.

Where the transfer framework still falls short

While the transfer regulations have undoubtedly prevented many harmful transfers, structural issues remain. Transparency for members is still inconsistent, particularly where amber flags are triggered. Requiring a member to attend a MoneyHelper appointment without clearly explaining why that safeguard has been activated risks undermining consumer understanding and trust, outcomes that sit uneasily with the expectations of Consumer Duty.

More fundamentally, the treatment of overseas investments continues to present challenges. The current framework does not always distinguish effectively between legitimate, well‑regulated international investments and arrangements that present genuine risk. Where scheme discretion is limited, members may face mandatory referrals that feel disproportionate, creating friction without necessarily enhancing protection.

Similar tensions arise around incentives. Legitimate marketing initiatives by reputable firms can still be caught by red‑flag provisions designed to prevent scams, resulting in transfers being delayed or blocked despite no evidence of consumer detriment. Such outcomes do little to advance consumer protection and risk eroding confidence in the system.

Looking ahead: targeted protection and better outcomes

As regulatory scrutiny continues to mature, there remains a clear opportunity to refine the regime so that safeguards are more precisely targeted at genuine harm. Doing so would allow trustees and providers to focus resources where they matter most: protecting members from fraud, ensuring informed decision‑making, and delivering the good outcomes that Consumer Duty now unequivocally demands.

Supporting international pension needs

Supporting these objectives, Belasko’s international pensions capability, delivered through Concept Group, part of the Belasko Group, brings over two decades of experience in fiduciary and retirement planning. Specialising in tailored international pension solutions under both contract and trust structures, the team supports clients with complex, cross‑border arrangements across a wide range of asset types and jurisdictions.

Operating independently as integration progresses, the focus remains on robust governance, regulatory compliance and forward‑thinking structures that support long‑term financial goals.

Get in touch with us to explore how we can support your long-term financial goals.

By Tom Moverley

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