Pension Fraud and HMRC Charges
Sue Flood • 30 July 2024

Interview with Sue Flood on Pension Fraud and HMRC Charges


Q: Sue, can you shed some light on how pension fraud became so rampant around 14 years ago?


Sue Flood: The regulatory framework was alarmingly weak around 14 years ago, which enabled fraudulent schemes to proliferate. HMRC's registration of these bogus occupational schemes lent them an air of legitimacy. Perpetrators set out to defraud & exploited this, selling , recommending these schemes to unsuspecting victims through FCA-regulated advisors. These bogus schemes were presented as genuine personal pensions but were, in fact, bogus schemes and in some cases, fraudulent. This period also saw a significant rise in investment fraud, where regulated financial advisors exploited their clients rather than providing honest, beneficial advice. In my opinion, it was a period of liberalisation that had the unintended consequence of allowing investment and pension fraud and scams to flourish. 


Q: Can you explain more about pension fraud /liberation as its depicted and the role of HMRC charges?


Sue Flood: Pension liberation (Fraud) gives the impression that victims set out to access pension funds before the age of 55, often marketed as a way to gain access to cash lump sums from retirement savings. Many of these schemes were falsely marketed by accredited regulated advisors as legitimate, but unfortunately, in most cases, these bogus occupational schemes were designed to exploit and defraud individuals unbeknown to the victims . HMRC’s role has been unfairly punitive treating everybody who received FCA advice to access their pension early the same. Instead of taking into account the crime committed against the individual and the consequence of that eg they could have had the entire pension withdrawal stolen from them and offering support or addressing the wrongdoing of those who set up these fraudulent schemes bogus schemes , HMRC has imposed severe penalties on the victims, treating them as if they were complicit in the fraud. The 55% tax charges on what HMRC deemed unauthorised payments have only added to the financial burden on victims, compounding their suffering with no allowances or exemptions made for individual circumstances. 


Q: How did these fraudulent schemes deceive people, and what were some examples?


Sue Flood: Some of the schemes created a false sense of legitimacy, backed by HMRC registration , tpr registration This made them appear credible, allowing unscrupulous accredited FCA advisors to deceive their clients, a clear breach of trust . Victims ranged from ordinary citizens, like nurses and firefighters, police officers to prominent business figures. They all trusted these qualified regulated professionals, only to be betrayed. The deception was so convincing that it was difficult for people to question or detect the fraud until it was too late.


Q: What has been the impact of these frauds on the victims, particularly concerning HMRC’s involvement?


Sue Flood: The impact has been catastrophic. Victims in some tragic cases have lost their pension funds to schemes that were later declared fraudulent or dishonest by the courts. Despite this, in my opinion, HMRC’s classification of these payments as unauthorised and the imposition of a harsh 55% tax was unjust. The lack of support from regulatory bodies like Action Fraud, TPR, and HMRC has left victims in dire straits. For 14 years, they have faced psychological and financial stresses that have driven them to breaking point, including accrued interest and threats from government trustees and HMRC. This relentless pressure has only compounded their suffering had a catastrophic impact on families. 


Q: What role has HMRC played in exacerbating the victims’ hardships?


Sue Flood: HMRC’s role has, in my opinion, been extremely unethical detrimental to the victims' well-being. Instead of providing relief or support, they have engaged in what victims describe as psychological warfare. Victims feel persecuted. They feel like they have been treated as criminals. The aggressive enforcement of tax penalties, combined with threatening communications, bailiffs, have pushed victims further into absolute crisis. The lack of empathy and continued pressure from HMRC has been both cruel and unjust in my opinion and completely at odds with HMRC’s Charter responsibilities. This all needs to be properly investigated and safeguarding measures put immediately in place to protect vulnerable victims of crime being further victimised. 


Q: HMRC has recently made statements in the press in relation to this issue suggesting that if something seems too good to be true, it probably is. Were these schemes truly too good to be true, and would wiping these charges put victims at an unfair advantage?


Sue Flood: No, these statements by HMRC are a form of victim blaming. The schemes were not too good to be true in the eyes of the victims; they were presented as legitimate by FCA authorised and regulated advisors. These professionals gave advice and assured people they did not advise of any consequences, and given their trusted positions, victims had no reason to doubt their advice. The idea that victims were greedy or seeking an unfair advantage is just not true at all. Many of the individuals affected were key workers, like fireman. nurses, police officers and veterans who simply wanted to secure their retirement. They have suffered significant losses, while the real wrongdoers—those who broke the rules, the advisors, the enablers, the facilitators—are not being held accountable or blamed at all. It’s purely the victims being blamed on top of enduring a decade of stress, health issues, endless meetings, legal and tax expert fees, and all sorts of other financial losses. We have victims in our group who are now battling homelessness and have lost their homes because of this situation. They have lost everything. They are clearly not in a better position than those who haven’t accessed their pensions early.


Q: How does this issue extend beyond pension fraud victims?


Sue Flood: This issue is far broader than just pension fraud. It’s about how the UK treats victims of fraud in general. Fraudsters don’t discriminate; victims come from all walks of life. For instance, footballers who were defrauded into film schemes have lost everything they worked for—their earnings, their pensions, their financial security. The same applies to those duped and scammed in other schemes, whether it’s self-assessment returns or the loan charge. I’d also like to make the point that just because someone was not financially knowledgeable, or a professional does not mean they should be penalized for being tricked by skilled fraudsters. I say this because we have victims who were professional advisors in Fraud Victims United who were scammed themselves. 

My message to all victims is that it doesn’t matter who you are, what scheme you were in, or what you did for a living. You are a human being, and your life matters. We are campaigning for fair and appropriate treatment for everyone affected. It could happen to anyone, and everyone deserves justice and support, not blame and unjust penalties.


Q: What motivated you to form the Fraud Victims Alliance , and what is its mission?


Sue Flood: Witnessing the profound suffering of these victims, being desperately afraid of the suicide risk and because of the glaring lack of support and justice they have faced. Alongside Carly Barnes Short, a lawyer who has also tirelessly advocated for victims for over a decade, we established the Investment & Pension Fraud Victim Alliance. Our mission is to support not only victims of historical fraud but also to protect current and future pensioners and investors.

We aim to:

  • Campaign for fair treatment for historical victims still grappling with the fallout from these schemes.
  • Advocate for an amnesty for victims and a suspension of harsh HMRC enforcement actions.
  • Push for an inquiry into how such extensive harm could occur and prevent future incidents.
  • Lobby for legal changes to protect individuals from similar frauds in the future.


Q: How does Fraud Victims United intend to help beyond addressing historical cases?


Sue Flood: Our team is dedicated to more than just historical cases. We aim to safeguard current and future pensioners and investors from falling victim to similar schemes. The emphasis should be on preventing deception and bad behaviour, supporting those who have fallen victim to recover and rebuild, and dealing with the perpetrators who broke the rules and regulations. We want to ensure that the focus is on tackling the root causes and providing proper support to those affected, rather than penalising victims.


Q: What message do you have for those in positions of power and for potential supporters?


Sue Flood: To those in power and in government, I plead with you to recognise the immense suffering of these victims as a result of top down systemic failures in these cases. The victims have endured years of hardship and deserve justice and support. Please stop HMRC persecuting these victims and find a fair solution so that everybody can move on with their shattered lives and try to rebuild.

For potential supporters, your involvement can make a significant difference. Together, we can advocate for those affected, push for necessary reforms, and ensure that no one else has to endure such devastation. Fraud Victims Alliance stands as a beacon of hope for a fairer, more just system, and we are committed to making that vision a reality.

The Mental Impact of Fraud — And the Path to Healing

26 May 2025
At Fraud Victims United , we often hear from people whose lives have been completely upended by fraud — not just financially, but emotionally and psychologically too. Yet this impact is still too often dismissed or ignored by authorities, media, and even friends and family.  We wanted to highlight this powerful article from PA Media that sheds much-needed light on the mental health toll of fraud : 👉 4 Mental Effects of Fraud – and How to Heal After Being Scammed The piece explores the deep emotional aftermath many victims face, including: Anxiety — 38% of recent victims reported experiencing panic attacks, with many struggling to sleep months later. Shame — feelings of guilt and humiliation that stop people from speaking out. Anger — especially when trust has been exploited in personal or professional contexts. Loss of trust — in people, systems, and even one’s own judgment. As financial crime specialist Sarah Lenette explains in the article: “Victims may feel a lower sense of security, or worry that [their information] could be used against them and leave them exposed to future scams.” These stories reflect what so many in our community already know: the emotional toll of fraud can last years — and it is every bit as real as the financial damage . Recent discussions at the Parliamentary Summit on Investment Fraud & Fairer Financial Services , hosted by the Investment Fraud Committee, also made it clear that mental health must be a central part of any serious response to this epidemic. Survivors deserve not only justice, but support. The article closes with practical, empowering steps for recovery — including: Reporting the fraud without shame Talking openly with others to break the silence Seeking support from specialist charities like Victim Support Rebuilding confidence through action — like securing accounts and learning about fraud tactics Victim Abbie Blyth sums up what many experience: “The immediate guilt, shame, and feeling of being a complete failure was the worst experience of my life.” At Fraud Victims United, we know healing takes time — but it also takes community, validation, and action. Articles like this help build that awareness, and we’re grateful to see the conversation shifting. 🔗 Read the full article here Please share it with anyone who might be struggling in silence. They are not alone.

Pension Scams: A National Crisis and Regulatory Scandal

by Jasmine Hawkins • 29 August 2024
The Pension Scam Crisis: A Scandal of Neglect and Regulatory Failure The United Kingdom is in the midst of a scandalous crisis that threatens the financial security of millions of its citizens. Pension scams, which have been steadily growing in sophistication and prevalence, now represent a multi-billion-pound problem. While fraudsters evolve their tactics to prey on the vulnerable, regulatory bodies have been alarmingly slow to respond. The result is a national disaster where millions have been targeted, with many losing their life savings. This article delves into the roots of this crisis, the scale of the problem, the abject failure of regulatory oversight, and the urgent need for comprehensive reform. The Alarming Growth of Pension Scams In recent years, pension scams have surged to unprecedented levels, spurred by changes in pension regulations and the growing complexity of the financial landscape. According to new research from LV= - a leading financial mutual serving over 1.3 million members with a range of financial products - approximately one in seven UK adults, or 7.3 million people, were targeted by pension scammers in the past year alone. These scams often begin with unsolicited calls, emails, or text messages - despite the fact that cold calling for pensions was made illegal in 2019. Yet, the regulators have done little to deter the fraudsters. These criminals exploit the greater flexibility introduced by pension rule changes over the past decade. While these changes were designed to give individuals more control over their retirement savings, they have also opened the door to a new breed of scammers, who lure victims with promises of high returns, low risk, and the opportunity to release pension funds early. The scale of the problem is staggering. From 2020 to 2023, pension and investment scams have cost victims more than £2.6 billion, with nearly 100,000 individuals affected. The average loss per victim is a devastating £26,773. The Sophistication of Modern Scams The evolution of these scams is both alarming and sophisticated. Over half of UK adults now believe that pension scams are becoming increasingly difficult to spot, with 77% stating that fraudsters are more sophisticated than ever. Scammers create convincing websites, use the names of legitimate companies, and even mimic the branding of reputable financial institutions to appear credible. This level of sophistication makes it challenging for even the most financially savvy individuals to differentiate between a legitimate offer and a scam. The rise of technology has also played a role in the increasing complexity of these scams. Phishing scams, trusted organisation scams, and refund scams are just a few of the tactics used by fraudsters to deceive their victims. In the past 12 months alone, 42% of UK adults reported receiving a phishing scam, 36% encountered a trusted organisation scam, and 24% were targeted by a refund scam. This research from pensions and retirement specialist LV= underscore the pervasive nature of the problem and the urgent need for more robust protective measures. Regulatory Bodies: A Failure to Act While the scale and sophistication of pension scams have grown, the response from regulatory bodies has been woefully inadequate. Agencies such as the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) are tasked with protecting the public from financial harm, yet their actions - or lack thereof - have allowed scammers to thrive. The FCA and TPR have issued countless warnings and guidelines, but these efforts have proven insufficient in curbing the epidemic of pension fraud. The fact that pension scams have continued unabated for over 14 years is a damning indictment of these regulators’ effectiveness. Their failure to take decisive action has created an environment in which scammers can operate with impunity, leaving millions of people at risk. One of the most scandalous aspects of this crisis is the sheer negligence displayed by these regulatory bodies. It’s scandalous that after 14 years of pension scams, no regulatory body is taking the necessary action to stop it. If the regulators did their jobs properly, this wouldn’t be happening. This is not just a failure of oversight but a betrayal of the public trust. The regulators have allowed the very people they are meant to protect to be preyed upon by criminals, resulting in life-altering financial losses for thousands of individuals. The Human Cost of Pension Scams Behind every statistic is a human story - a retiree or soon-to-be retiree who has worked hard, saved diligently, and trusted that their pension would provide them with financial security in their later years. These are not just numbers on a spreadsheet but real people whose lives have been shattered by the actions of scammers and the inaction of regulators. The financial losses are only part of the story. The emotional toll of being scammed out of one’s life savings can be immense. Victims often experience feelings of shame, embarrassment, and helplessness. For many, the loss of their pension means a dramatic change in their quality of life, forcing them to rely on state benefits or family members for support. The psychological impact of this betrayal can be long-lasting, affecting victims’ mental health and well-being. The Role of Small Pension Pots One of the factors contributing to the pension scam crisis is the proliferation of small pension pots. Around six million UK adults have multiple pension pots, which increases the complexity of managing their retirement savings. This fragmentation makes it easier for scammers to target individuals, as people with multiple pots are more likely to be confused about their pension arrangements and more vulnerable to fraudulent schemes. The complexity of managing multiple pension pots can also lead to poor decision-making. Many individuals are unsure of how to consolidate their pots or where to seek trustworthy advice. Scammers exploit this confusion by offering seemingly helpful services, such as “pension consolidation” or “early access” to funds, which are often fronts for fraudulent schemes. Inadequate Awareness and Reporting Another significant issue contributing to the pension scam crisis is the lack of awareness among the public about how to recognize and report scams. According to the research surveying 4,000 nationally representative UK adults, only 32% of UK adults know how to report a suspected scam. This figure rises to 55% for those who are clients of financial advisers, but it is still alarmingly low. The lack of knowledge about reporting procedures means that many scams go unreported, allowing fraudsters to continue their operations with little fear of being caught. For those who do report scams, the process of recovering lost funds can be arduous and time-consuming. While there is some protection for individuals who have dealt with FCA-regulated advisers or pension providers, the reality is that getting money back after a scam can take months or even years. In some cases, victims may never fully recover their losses, particularly if the scam involved an unregulated entity that has since disappeared. The Need for Comprehensive Reform The pension scam crisis is a wake-up call for the UK’s regulatory bodies and the government. The current system is failing to protect consumers, and without significant reforms, the situation will only worsen. The following are key areas where urgent action is needed: 1. **Stricter Enforcement:** Regulatory bodies must take a more aggressive stance against pension scammers. This includes shutting down fraudulent operations, prosecuting those responsible, and imposing harsh penalties on firms that engage in or facilitate scams. 2. **Improved Public Awareness:** There needs to be a nationwide campaign to educate the public about the dangers of pension scams and how to recognise and report them. This campaign should target vulnerable groups, such as retirees and those nearing retirement, who are most at risk. 3. **Consolidation of Pension Pots:** The government should explore ways to simplify the management of pension pots, making it easier for individuals to consolidate their savings and reducing the opportunities for scammers to exploit confusion. 4. **Support for Victims:** Victims of pension scams need better support from regulatory bodies and the financial services industry. This includes faster resolution of claims, easier access to compensation, and comprehensive emotional support to help victims cope with the aftermath of a scam. 5. **Accountability for Regulators:** There should be a thorough investigation into the failures of the FCA and TPR to prevent the pension scam crisis. These bodies must be held accountable for their inaction, and measures must be put in place to ensure that such failures do not happen again. A Scandal That Cannot Be Ignored The pension scam crisis is more than just a financial issue; it is a national scandal that has destroyed the lives of countless individuals and exposed the deep flaws in the UK’s regulatory system. The fact that this crisis has been allowed to continue for over 14 years, with little meaningful action from the regulators, is nothing short of disgraceful. It is a damning indictment of a system that prioritizes bureaucracy over the protection of the public. The time for excuses is over. The government, regulatory bodies, and the financial services industry must come together to address this crisis with the urgency and seriousness it demands. Millions of people’s financial futures are at stake, and the trust in the UK’s pension system hangs in the balance. If the regulators had done their jobs properly, this crisis could have been averted. Now, they must act decisively to end the epidemic of pension scams and restore the public’s faith in the system. The scandal cannot be ignored any longer - it’s time for action.