Finally, a ban on pensions cold calling
20 August 2017
WELL DONE TO THE GOVERNMENT FOR DECISION TO BAN PENSIONS COLD CALLING AT LAST
- Great to see DWP will act, not just keep consulting
- Protecting people’s pensions from fraudsters is so important
- Can give clear message to the public that anyone who contacts them out of the blue about their pensions is a criminal
- This issue has clear cross-party and industry support
Banning cold calls and tightening protection against transfers to fraud schemes: The Government has bowed to the overwhelming pressure from politicians in all parties, consumer groups and the pensions industry to urgently introduce a ban on pensions cold calling. This is great news. It is also going to toughen rules on transfers out of occupational schemes and tighten HMRC requirements that will make it much more difficult to set up fraudulent schemes.
The case for banning unsolicited approaches seems clear and unequivocal: Currently, any scam company can buy a list of ‘prospects’ and contact them out of the blue to offer them a free pension review that leads to them losing their entire pension in a fraudulent scheme. Cold calling for mortgages was banned years ago and the public needs the same protection for other financial matters. People can only be approached about a mortgage if they have expressly requested contact from the company by name. Just ticking a generic box about financial promotions would not make the approach legal. Doing the same for pensions would be a significant step forward in protecting the public
Banning unsolicited approaches means we can send clear message to the public – JUST HANG UP! No reputable company should need to contact people out of the blue – they can find better ways to generate business. A ban would send a strong signal to the public that if someone contacts them out of the blue to discuss their pension, they should ‘Just Hang Up’. If they receive unsolicited texts or emails, ‘just delete them’. Anyone who does this will be a criminal. Even that friendly person offering a free review will not have your interests at heart. A ban would make the situation clear.
Public needs to be better protected: Since 2014, people have been scammed out of £43million of pensions and just in the first five months of this year they have lost £5million to fraudsters. This is money people need for their retirement and the scams nearly always start with a cold call. Government initiatives so far have not worked. Measures to impose Caller Line Identification and campaigns such as ‘Scorpion’ and ‘Project Bloom’ are not protecting people enough. ‘Action Fraud’ figures show over 2000 frauds reported since 2014, but only 7 suspects have been summonsed or charged and no convictions.
Pension freedoms give people more flexibility but also mean they need better protection: The new pension rules ensure people can use their pensions more freely, but this also increases the risks they face and leaves more people in need of guidance. It is right to give people more flexibility and choice over their pension savings, but the Government is right to ensure that it also increases protection against fraudulent unsolicited approaches.
Government will also tighten rules to stop set up or transfer to fraud schemes: It is also welcome news that the Government intends to tighten HMRC rules that will make it harder to establish fraudulent schemes and also toughen rules on transferring pensions from one scheme to another. Only companies who produce regular accounts will be approved as pension schemes and trustees of occupational pensions will be required to check that receiving schemes are regulated by the FCA, or are authorised as MasterTrusts or have a clear employment link.
Public should always check with PensionWise: Some scammers have masqueraded as a ‘Government approved’ review service. Individuals may have heard that the Government has indeed set up a free guidance service, called PensionWise, but it is vital to let people know that PensionWise will NEVER cold call you or contact you without you approaching them first. So the clear message to the public is that you should always contact PensionWise or your independent financial adviser before reviewing or making decisions about your pension.
The sooner the Government acts, the sooner we can improve protection for people’s pensions: We will never stop such fraudsters completely, but these measures will certainly protect the public better – about time too.