Government plans to ban cold calling on all financial products as part of its new fraud strategy have received a welcome within the financial services industry as step in the right direction.
In a statement on Wednesday, the government said fraud accounts for more than 40% of all crime in England and Wales, with one in 15 adults affected. Its new strategy aims to cut fraud by 10% by the end of 2024.
Tom Selby, head of retirement policy at AJ Bell, said: “Financial scams are a scourge on society and ruin lives so any move to protect more consumers from different types of fraud is extremely welcome. Governments cannot stop scams altogether but they can place significant barriers in the way of those intent on committing fraud.”
According to UK Finance, an estimated £1.3 billion was stolen through financial fraud in 2021, with these scams often starting with an unsolicited approach from someone via phone, text message, email or on social media.
Selby said: “The successful campaign to ban pensions cold-calling in 2019 was never supposed to be just about pensions. We have always warned that the vast majority of fraud takes place outside of pensions, usually in the form of investment ‘opportunities’ that turn out to be at best missold and at worst entirely non-existent.
“The ban on pensions cold-calling therefore needed to be seen as the beginning of a wider effort to tackle scams more generally and beef-up education. The pandemic and the subsequent cost-of-living crisis have both resulted in rising vulnerability in the UK which, depressingly, is like blood in the water to fraudsters.”
AJ Bell has called for the government’s new strategy to include tightly worded legislation to ensure “nefarious contacts” are specifically targeted and has called for internet giants such as Google to take greater responsibility for paid-for scam adverts.
Selby added: “The grim reality is that, even with new rules and tough enforcement, scammers will continue their attempts to plunder people’s hard-earned savings. It is therefore vital, regardless of what the government does, that Brits keep their wits about them and are cautious when they are contacted out of the blue by someone they don’t know about their finances. Much of this is common sense, but it could save you from financial misery.”
Trade association PIMFA called the government’s fraud strategy a “genuine step forward” in the fight against fraud.
Alexandra Roberts, head of regulation at PIMFA, said: “The additional resourcing, including 400 specialist officers to be recruited to investigate fraud, announced by the Government, and the commitment to work with industry are particularly welcome.
“We welcome the extension of the ban on cold calling to all financial products, including crypto currencies, investment and insurance products. This is a natural extension of the initial ban on cold calling on pensions that can only help to protect consumers from scams.”
Dean Butler, managing director for customer at Standard Life, also welcomed the government’s approach.
He commented: “Building on the 2019 move to ban pension cold calling and extending it to all financial products has the potential to reduce the scourge of financial fraud which causes a great deal of pain. While pension fraud still exists, there is widespread recognition that the cold calling ban was a step in the right direction which ultimately has made people more cautious of unsolicited pension review calls and other tactics previously employed by some fraudsters.”
