ScamSmart campaign reveals worrying statistics on pension fraud
New analysis as part of the ScamSmart campaign, jointly launched last year by the FCA and The Pensions Regulator (TPR), has highlighted the risk of falling victim to pension fraud.
Research suggests that, on average, victims of pension fraud lose £82,000 which equates to roughly 22 years’ worth of savings. Despite this, 24% of people will take 24 hours or less to decide on a pension offer. The research also suggests that:
- 63% would trust someone offering pensions advice out of the blue
- Those with a university degree are 40% more likely to accept a free pension review from an unknown company
- Those with a university degree are also 21% more likely to take up the offer of early access to their pension pot.
Offers of free pension reviews, advice or early access to customers’ pension pots are common scam tactics. Victims are often approached unexpectedly by unknown companies.
The regulators are urging savers to understand the warning signs of a scam and be vigilant if dealing with a new company.
Managing conflicts between MiFID II and US regulation
The FCA has said that it supports the extension of no-action relief on MiFID II research payments by the US Securities and Exchange Commission (US SEC).
Now in place until July 2023, the SEC staff no-action letter allows broker-dealers subject to the US regime to receive payments for research without being considered an investment adviser under US law.
The letter was launched in 2017 with the aim of preserving investor access to research following MiFID II rules that require brokers to price and provide this unbundled.
The FCA has confirmed that it will also apply to UK firms post-Brexit.
How can regulators keep up with innovation?
Nick Cook, Director of Innovation at the FCA, gave a speech at the CDO Exchange Financial Services 2019.
The conference aims to drive innovation, compliance and collaboration with the power of data. Cook’s speech covered the FCA’s innovation services with a specific focus on supporting RegTech – an area which has typically been ‘underserviced’.
He began by highlighting the success of the FCA’s sandbox, which was launched five years ago as part of Project Innovate. Of the 47 firms that have completed sandbox testing so far, 80% are now operating in the market. Yet there is a still a need to increase the variety of propositions that are using the sandbox to ensure outcomes meet the needs of the UK economy and wider society. Desired outcomes include overcoming the issues of accessibility and vulnerability, climate change, and the challenges faced by regulated firms.
Specifically focusing on the final area of interest, Cook said that the FCA is looking into how it can support RegTech firms to effectively demonstrate the value of products to potential customers, which is a key challenge. This could involve helping to provide a digital testing environment where firms can test new solutions.
As well as specific outcomes, Cook also mentioned the technologies that the FCA is keen for firms to explore. These include:
- ‘Federated learning’ or ‘travelling algorithms’, allowing algorithms to be trained across multiple decentralised data assets
- Tech that better models relationships, connections and behaviours in financial markets, which could be used by both regulators and firms alike to predict the potential impact of new developments.
He closed his speech by stressing that while technology is a solution for many of the challenges faced today, regulators across the globe must embrace innovation and work together to unlock its potential and shape the future of the industry.
FCA appoints new board members
The FCA has appointed three new non-executive directors to the Board.
Liam Coleman, Alice Maynard CBE and Tommaso Valletti have all held senior roles within financial services and across various regulated industries, and will serve three-year terms beginning on the 5th November 2019.