About 15 years ago, as I was about to embark on a new career as a self-employed journalist, it occurred to me one potential additional string to my bow might be that of a money coach.
There was no regulated activity involved: for those whose likely needs included product-related financial planning, I offered guidance on how to find an IFA and what things to look for when searching for a good adviser.
After about two years I ceased this line of activity. But during that time, I was contacted by several alert IFAs who had visited my website and asked if I was interested in deals to introduce any clients in need of regulated advice exclusively to them.
While the potential rewards on offer were significant, I declined every approach made to me. Linking up with one, or even several good advisers spread geographically across the UK would have meant a significant danger of no longer seen as impartial by the rest of the IFA community.
The role of introducers paid to search out and intermediate between advisers and prospective clients appears to have largely withered on the vine these days. Yes, there are organisations that charge for leads, while “free advice seminars” are not uncommon as are other marketing stunts. But the idea of cold-calling punters and lining them up for advisers to sell products to is no longer considered very appropriate by most of the industry.
Indeed, the idea of cold-calling is largely considered unacceptable. Quite what my wife’s Uncle Archie would make of this is anyone’s guess: he spent 15 financially fruitful years as a life insurance salesman in the 1980s and early 1990s making random calls to small firms listed in his local Yellow Pages in a bid to drum up business.
But as advisers have almost completely vacated this area of activity, a far nastier breed of cold-callers and self-styled “introducer” has filled the void. Along with millions of other consumers, I have received more than a dozen calls in the past two or three years from script-reading touts offering to put me in touch with someone who can carry out a free “review” of my pension, “backed by the Government” no less.
The lack of knowledge and understanding about pensions from these cold-callers is astonishing. When I asked one woman calling last year the difference between defined benefit and defined contribution schemes, she put the phone down on me.
According to the Treasury last year, more than 11 million people at or close to retirement age are targeted every year by cold callers. While most are sensible and know to end a call from one of these scammers pretty quickly, a small minority will end up losing large chunks of their life savings.
A Treasury document says there were 30,000 DC scheme transfers in 2015/16, representing £1bn of assets. Industry estimates suggest fraudsters could be behind as many as one in 10 pension transfer requests. Up to £20m is scammed in this way every year – and that figure may turn out to be on the low side.
It is to the industry’s credit that it has rallied behind a campaign led by Red Circle Financial Planning director Darren Cooke, aimed at banning cold callers. Almost 9,000 signatures were gathered last year, mostly from within the industry in an effort to persuade the Government to ban this activity.
Last November, it seemed as if this campaign had succeeded. The newly appointed Chancellor Philip Hammond announced in his Autumn Statement that a measure to ban cold-calling would be introduced imminently. Consultation on the substance of a ban was launched shortly afterwards but since the election there has largely been silence since then.
If a ban on cold-calling were to be introduced, the logical place for such an amendment to be inserted would be within the Financial Guidance and Claims Bill currently making its way through Parliament. However, it is reported that Peta Buscombe, the parliamentary undersecretary of state for work and pensions, is saying the complexity involved in devising an effective ban means more consultation is needed. Meanwhile, the Government “does not believe it is the right time for the ban to be included in the Bill”.
In the Lords, Ros Altmann has renewed calls for a complete and immediate ban on cold-calling. She points out data from the Action Fraud centre for fraud and cybercrime showed that while 2,000 frauds had been reported since 2014, only seven suspects have been summonsed or charged over these scams. There has not been single conviction in that time.
Ros adds if the ban does not make it into the Financial Guidance and Claims Bill, there is no other legislative vehicle where this might happen.
Parliamentary observers point out this is the only personal finance bill in the current two-year legislative programme set out within the Queen’s Speech. In other words, it is literally a case of do it now or face delays of several years before a ban is introduced.
While we wait, many thousands more older people, almost by definition the most vulnerable in our society, will lose some or all of their pension savings. This must not be allowed to happen.
Nic Cicutti can be contacted at firstname.lastname@example.org