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Cold call ban set for June should be beginning of ‘onslaught’ on pension scammers

8 March 2018

The Government has said a ban on pensions cold calling will come into force by June 2018. But industry commentators say this should just be the beginning of the campaign against pension scammers. 

If the Secretary of State has not implemented the ban by this date this will need to be explained to Parliament, the Government said in its amendment to the Financial Guidance and Claims Bill.

The announcement of an implementation date follows repeated calls from the pensions industry to ban unsolicited pension calls. The government announced last year that it would introduce a ban in an effort to protect savers from scammers, but did not provide a date.

Tom Selby, senior analyst at AJ Bell, said: “After years of prevarication the Government is finally taking decisive action in the war on pension scammers. The ban on cold-calling might not kill all forms of pension fraud stone dead, but it will certainly wound firms attempting to defraud savers of their hard-earned retirement pots. It also sends a clear message to people that if they receive a cold-call about their pension, they should simply hang up the phone.”

Kate Smith, head of pensions at Aegon, said: “Growing at an exponential rate, pension scams have been a menace for years. At last the government has taken some action to tackle pensions fraud that has brought misery to thousands and cost people tens of millions of pounds every year. Even once it’s in place, people will still need to protect themselves from fraudsters based overseas, not affected by the ban, or others who simply flout it.”

However, both Selby and Smith warned that while the ban offers a degree of protection, consumers must continue to be vigilant and further steps should be taken by the government to help.

Selby said: “The reality is scammers are becoming increasingly sophisticated and in the time it has taken policymakers to introduce this ban, tactics have evolved. We have always said a cold-calling ban should be viewed as the beginning of the onslaught on pension scammers, and we urge the Government and regulators to consider further interventions to protect savers.

“Hundreds of millions of pounds has been lost by people using their pensions to invest in unregulated schemes that remain at the heart of many recent scandals. Introducing a permitted investments list for SIPPs so such investments are no longer allowed would be a huge step forward in tackling the scourge of pensions fraud.”

Smith added: “The good news is that HMRC is already trawling its pension scheme database getting ready to wield its new powers to deregister illegitimate schemes from April. For now the battle has been won, but it would be premature to celebrate until pension scamming is stamped out completely. The best way to do this is to give pension schemes powers to block suspicious transfers, so hard earned pensions aren’t moved to pension scam vehicles in the first place. This would stop a lot of heartache. Government, regulators as well as the industry have a role to play here in the fight to keep pension savers‘ money safe.”

Default Guidance

Also included in the Financial Guidance and Claims Bill was a new requirement for savers to confirm they have received or opted out of ‘appropriate’ guidance before transferring their pension or accessing the pension freedoms for the first time.

Selby commented: “We are pleased the Government has rejected calls to introduce ‘default’ guidance at the point someone wants to access their own money. The amendment put forward will instead strengthen signposting to guidance and require savers to confirm they have received or opted out of guidance before their retirement savings are transferred or released.

“We are supportive of boosting both the take-up and effectiveness of pensions guidance interventions, and will continue to engage with all interested parties to ensure any proposals will work on a practical level.”

 

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