A report from the Work and Pensions Committee is calling on the government to "act quickly and decisively" to protect pension savers, more than five years on from the introduction of the pension freedoms, which have put people at risk of a much wider range of scams and fraud.
The report warns that commonly cited figures of the scale of pension scamming are likely to substantially underestimate the problem.
The situation is likely to be getting worse rather than better, with the COVID-19 pandemic offering scammers new opportunities.
The committee said that it heard throughout its inquiry that pension scammers have moved online, with regulators powerless to hold search engines and social media to account for hosting scam adverts as they do traditional media.
Tech firms such as Google (GOOGL) are accepting payment to advertise scams and then further payments from regulators to publish warnings – a practice the committee describes as "immoral."
The committee has said the government must now rethink its decision to exclude financial harms from the forthcoming Online Safety Bill and use it to legislate against online investment fraud.
In the same way as traditional media, online publishers should be required to ensure financial promotions are authorised.
The report also calls for the multi-agency task force set up to tackle pension fraud to be strengthened.
The existing Project Bloom should be renamed the Pension Scams Centre and given dedicated funding and staffing to manage an intelligence database and law enforcement.
Currently the fragmentation of reporting, investigation and enforcement has made tackling pension scams more difficult.
The committee also said the Financial Conduct Authority (FCA) must "raise its game" and publish information about its enforcement action, with the committee hearing numerous criticisms that it is not effective in stopping scams, punishing scammers or retrieving scam proceeds.
A Google spokesperson said: “Protecting consumers and credible businesses operating in the financial sector is a priority for us. We take dishonest business practices and misleading ads very seriously and consider them to be a violation of our policies.
"Last year, we updated our financial services policies and removed 3.1 billion bad ads from our platforms, of which 123 million were ads related to financial services. When ads do not comply with our policies; we take action to remove them."
According to the internet search giant, over the past year, it has been working closely with the FCA, sharing information and expertise. In early 2020, it asked the FCA to notify the firm when they make additions to their warning list and it actions all additions.
Google also said it has strict policies that govern the kinds of ads that allowed to run on its platform. It said it enforces those policies vigorously, and if it finds ads that are in violation it removes them.
Stephen Timms MP, chair of the Work and Pensions Committee, said the result of lax regulation and a move to online has resulted in "an online free for all, where scammers can advertise with impunity while the tech giants line their pockets from the proceeds of their crimes."
"With global firms such as Google being increasingly influential as providers of information, consumers looking for financial advice are being let down by not being afforded the same level of protection they receive from adverts which appear on television or in a newspaper.
"There must now be parity across the media to ensure all adverts are regulated and the Government should use its Online Safety Bill to act."
A FCA spokesperson said: “We welcome the Work and Pensions Committee report into protecting pension savers and appreciated the opportunity to give evidence. We will consider the recommendations made, along with our partner authorities. Tackling scams is a priority for the FCA and we have dedicated considerable resources to it over the last few years in both prevention and pursuit.
“We share responsibility for disrupting these scams with other regulators and law enforcement, and will continue to work with any and all bodies involved in fighting fraud and scams to prevent further harm to consumers.”
The report follows research released by Which? last week, which found scams have skyrocketed in recent years and since the start of the coronavirus crisis. The analysis of Action Fraud figures suggests victims lost £1.7bn ($2.4bn) over 12 months – which works out at £3,234 reported lost to scams every minute. Many scams will also have gone unreported over this period, meaning the true figure is likely to be much higher.
Much of this growth in scams has been fuelled by criminals shifting their activities online.
A Which? survey of more than 200 investment scam victims found that while one in seven (15%) were targeted by phone, that number was dwarfed by those lured in via online methods. Four in 10 (39%) victims were targeted via email (12%), search engines (10%), adverts on Facebook (9%) or other non-social media or search engine online adverts (8%).
The consequences for victims can be devastating. Average losses to “clone” scams, those using websites that replicate legitimate firms, average £45,000 – but Which? has heard from victims who have lost six-figure sums.
Watch: Scammers thriving under lockdown