Pensions cold calling ban welcomed but more urgency needed to implement it
24 August 2017
The Department for Work and Pensions and HM Treasury has confirmed in the Pension Scams: Consultation Response that the government will be proceeding with a ban on cold calling. However, no clear timetable was announced which has led to calls for more urgency from government to get the ban in place.
Guy Opperman, minister for pensions and financial inclusion, said that scammers had wrongfully acquired nearly £5m of pension money in the first five months of 2017. It is estimated that over £43m has been obtained by scammers since 2014, when the pensions freedoms were first announced.
The Government announced its intention to make life more difficult for pension scammers in November 2016 but the response was one of those interrupted by the decision to call a snap general election.
The original consultation contained three key proposals:
1. Banning cold-calling in relation to pensions
2. Limiting the statutory right of a member to transfer
3. Only allowing Small Self-Administered Schemes (SSASs) to be set up by an active company
This weekend’s announcement confirmed that the cold-calling ban will also cover unsolicited texts and emails. Other measures will include tightening HMRC rules to stop scammers opening fraudulent pension schemes and greater powers of restriction to help prevent transfers from occupational pensions into fraudulent schemes. The latter puts an onus on trustees to ensure the receiving scheme is FCA regulated, has an active employment link with the individual or is an authorised mastertrust.
While the ban was widely welcomed by commentators, the lack of an implementation date has been criticised, in particular as the delays already experienced had allowed for another £5m to be scammed from consumers in that time and knowing new legislation is coming in, scammers are likely to make the most of the time remaining to them.
James Walsh, spokesperson for the Pensions and Lifetime Savings Association (PLSA) said: “While this is a step in the right direction… we need a clear timetable from Government on when it will implement key elements of its proposals. We need more urgency.
Tom Selby, senior analyst at AJ Bell, was optimistic that the measures announced by the Government would “put a severe dent in the business models used by these fraudsters”, with pension scammers having “already done huge amounts of damage, defrauding hard-working savers of millions of pounds and causing untold emotional harm to thousands of people”, but said it was “concerning” there was no set date for implementation. “We urge policymakers to fast-track these vital protections through Parliament as a matter of urgency,” he said.
“This must be seen as the start as the fightback against scammers rather than the end, however. Policymakers should monitor the effectiveness of these measures closely and consider further changes if savers continue to be pick-pocketed by fraudsters.”
There were doubts expressed also as to how successful the ban will be, particularly as it cannot be applied to calls from abroad.
Old Mutual Wealth head of retirement policy, Jon Greer, said: “Let’s face facts, many cold callers today will already be operating illegal pension scams. If they are already willing to break the law, a cold calling ban won’t stop them.
“So the main benefit of this ban is really to raise public awareness and make sure they are suspicious of any cold calling activity.
“Some people will slip through the net, however, and unwittingly attempt to switch their pension into a fraudulent scheme. So, it is right that the government has also taken steps to close loopholes that have enabled unscrupulous individuals to set up pension schemes, and have given trustees greater power to block transfers if they have concerns.”
Commenting on the proposed change in legislation later this year to ensure that only active companies can register a new pension scheme, the PLSA’s Walsh said while it “looks like a positive step” it would need “careful implementation to ensure scammers cannot abuse it”.
On a more positive note, Selby said the fact that emails and text messages will also be covered by the ban “means savers can be absolutely certain that if someone they don’t know contacts them out of the blue about their pension, they simply should not engage with them. That means don’t email, don’t text back and hang up the phone.”
Overall, he added, “the message this intervention sends to savers is hugely valuable and should go some way to reducing the number of people who get conned out of their life savings”.
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