Margaret Snowdon OBE has spent over a decade fighting pension and investment scams. Now, as chair of the Pension Scams Industry Group (PSIG) and the Retirement Income Taskforce for the Consumer Duty Alliance, she is throwing her weight behind a growing call for the Treasury to set up a dedicated compensation fund for fraud victims.
Her intervention comes after an FT Adviser poll found overwhelming support among readers for channelling a share of regulatory fines into a new fund. Writing to the editor, Snowdon made clear she backs the idea wholeheartedly.
A Problem That Keeps Growing
PSIG’s code of practice has helped the industry catch scams earlier, and Snowdon is the first to acknowledge the progress made. Countless millions of pounds have been kept out of fraudsters’ hands as a result. But she is equally blunt about how far there is still to go.
Fraud costs the UK an estimated £300 billion a year. The government’s new UK Fraud Strategy is a step in the right direction, she says, but aligning the national machinery to tackle it properly will take time. Different agencies have different priorities, and some of those priorities end up working against each other, which only plays into the hands of criminals.
Victims Are Being Let Down
What clearly frustrates Snowdon most is how victims are treated. She works closely with people who have been left devastated by mis-sold pensions and outright scams, and describes their stories as both heartbreaking and infuriating. Worse still, she says, is the tendency of government agencies to blame the victims themselves for falling into the trap.
“This is unacceptable,” she wrote, “and does considerably more harm than the fraud itself.”
Real change, in her view, will only arrive when the authorities start genuinely caring about victims and adopt a zero-tolerance approach towards the people who defraud them.
The Compensation System Is Not Fit for Purpose
Snowdon has long argued that current pension compensation arrangements fall short. They are inconsistent, dependent on which regulatory regime applies, and hemmed in by time limits. If a victim does not know where to turn straight away, they can find themselves locked out of help by the time they do.
She pointed to two existing schemes. The Fraud Compensation Fund covers proven fraud on trust-based pension schemes, but it compensates the scheme itself rather than the individual victim. In practice, even where a scheme recovers enough money to pay something back, most victims still lose around half of their savings.
The Financial Services Compensation Scheme, meanwhile, only steps in where a regulated adviser has got things wrong and is no longer trading. There is also a cap on what it will pay out.
To make matters worse, many victims of historical pension fraud face tax charges from HMRC for having been placed into a fraudulent scheme, regardless of the fact they were deceived. There is no relief available. Some are still paying those bills years later.
Snowdon did not mince words: the law, as it stands, simply is not working for these people.
The Hidden Cost Nobody Talks About
Beyond the financial losses, Snowdon highlighted something that rarely gets the attention it deserves: the mental toll on victims. Many struggle to work, end up drawing on state benefits, and lean heavily on NHS services.
She has done the sums. For historical pension scam victims alone, she estimates the annual cost to the NHS of depression medication, cognitive behavioural therapy, GP visits and sick notes runs to around £15 million. Over the fifteen years many of these people have been suffering, that adds up to roughly £225 million, a figure that dwarfs the estimated £20 million it would have cost the Treasury to write off their tax liabilities at the outset.
It is, as she put it, completely out of proportion.
A Practical Way Forward
So where should the money come from? Snowdon has two suggestions.
First, the authorities should be seizing assets from convicted scammers. They already have the power to do so, but too often choose not to exercise it. That inaction, she argues, makes the UK an easy target.
Second, platforms and promoters that profit from advertising fraudulent schemes should either pay a fraud levy or be required to take down scam promotions immediately. No exceptions.
Snowdon welcomed the support shown by FT Adviser readers for a dedicated fund, calling it music to her ears. After more than a decade of campaigning, the message is simple: victims deserve better, and the tools to deliver that already exist. What is missing is the political will to use them.
Like the FT Adviser, Claim my Loss fully supports the idea of setting up a compensation fund for fraud victims. The current system leaves too many people without a meaningful route to recovery, and a properly funded scheme would go a long way towards putting that right.
Article Source: FT Adviser
