The Government ban on pensions cold-calling has been welcomed by advisers despite some reservations from firms that rely on cold-calling for customer leads.
Chancellor Philip Hammond confirmed it would seek to ban pensions cold-calling in the Autumn Statement today, with scammers facing fines of up to £500,000.
The Statement reads: “The government will shortly publish a consultation on options to tackle pension scams, including banning cold calling in relation to pensions, giving firms greater powers to block suspicious transfers and making it harder for scammers to abuse ‘small self-administered schemes’.”
Under the proposed regime, all calls where a business has no existing relationship with the consumer will be forbidden. This includes scammers targeting those who are opted-in to receiving third-party communications.
Advisers commenting on Money Marketing’s website raised concerns with how the ban might be enforced.
A Treasury spokeswoman explains: “We’re consulting on it, but the intention is to make these calls illegal. Basically people will be able to pass the details on to the Information Commissioner who will deal with it.”
The Information Commissioner’s Office says it looks forward to receiving more detail on how the proposal will work in practice.
A spokeswoman says: “Any change that makes it easier for us to take action against companies making nuisance calls will be welcomed by the people who suffer from these calls, particularly those most vulnerable.”
Red Circle Financial Planning director Darren Cooke, who started an online petition in September to ban pension cold-calling, says he is not concerned about the enforcement of the ban.
He says: “Most of the call centres are based in the UK, they will stop, and the ones that are not based in the UK, it is about the public awareness that if you get a call it is a criminal on the other end of the line.
“If people know it is illegal, hopefully they hang up and we cut the scammers off. It is about disrupting their business model. If it becomes less and less successful they will give up – they will move onto something else – but at least that route to market will be cut off.”
Rowley Turton chartered financial planner Scott Gallacher welcomes the ban but warns it could impact some advisers’ business models.
He says: “There are perfectly legitimate advisers who are trying to build a business and one of the ways they get business is by calling people and offering them an initial meeting or free review. The problem is that you cannot tell on the basis of that phone call whether that is a genuine IFA trying to sell their services or if it is a scammer.”
The proposals also include wider measures to crack down on pension scams, including giving firms more powers to block suspicious transfers.
The Treasury says scammers could be behind as many as one in 10 pension transfer requests.
The proposals will also suggest making it harder for scammers to open fraudulent pension schemes. It plans to do this by stopping small self-administered schemes from setting up by using a dormant company as the sponsoring employer.
A statement from the Treasury says there is one pension cold-call made every eight seconds, with almost 11 million pensioners targeted each year.
According to the Treasury, savers reported estimated losses of almost £19m to pensions scams between April 2015 and March 2016.
The Treasury statement says: “With signs that pension fraud is on the increase, the Chancellor believes introducing hard-hitting changes – to stop scams before they occur – is more important than ever.”
The Government will consult on the proposals before the end of the year and the next steps will be announced in the Budget.
Cooke says it is great the Government has acknowledged there is a problem with pension cold- calling.
He says: “The petition formed a focal point and a rallying point for all relevant parties. When you start getting four or five major life insurers coming on board and three major networks and trade bodies, it was the industry backing that started to sway the Government to see that there is a problem.”