Wednesday, 09 January 2019 08:57

Pension cold callers face £500,000 fine as ban arrives

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Financial Planner Darren Cooke Financial Planner Darren Cooke

From today pension scammers who use cold calling can be hit with fines of up to £500,000.

After several years of campaigning, the pensions cold-calling ban has finally arrived today several years after it was first proposed.

Campaigning Financial Planner Darren Cooke of Red Circle helped to lead the fight to change the law.

He told Financial Planning Today he was delighted the ban had come into effect two and half years after he started a petition to change the law. He thanked the "many influential people and industry colleagues" who got behind the campaign.

He added that while the ban was a milestone he accepted it would not stop all pension scams.

He said: "The most significant thing is the change in government opinion. Two and a half years ago there was little interest but steadily the campaign grew with the help of some very influential people. Of course a ban won't stop all the crooks but I hope it will encourage people to understand it's illegal to make cold calls and if they get such a call to just hang up. The huge media interest and coverage of the ban is also hugely important."

He added that the most vulnerable age group to pension cold calls were aged between 45 and 65 and many were sophisticated savers. They now had some protection.

From today unsolicited calls about pensions have become illegal and companies that break the rules can face fines of up to £500,000.

Cold calls are defined as “unwanted, unsolicited phone calls” to people about their pensions.”

The ban prohibits cold-calling in relation to pensions, except where:

•the caller is authorised by the FCA, or is the trustee or manager of an occupational or personal pension scheme, and

•the recipient of the call consents to calls, or has an existing relationship with the caller

Pensions cold calling has been seen by many critics as at the root of pension scams, particularly on pension transfers.

The cold calling ban has been widely welcomed but some have voiced concern that scammers will find other forms of messaging to contact vulnerable savers. There is also some uncertainty about whether texts, emails and social media contacts are covered or loopholes can be exploited.

Personal finance journalist and BBC Moneybox present Paul Lewis was critical of the impact the ban would have. He Tweeted today: "The pension cold call ban will not apply to texts, emails, or social media, just phone calls. It will not apply to calls from abroad. It will not apply to calls from firms you have dealt with. It will not apply to calls about other investments. It will not work."

Tom Selby, senior analyst at AJ Bell, said: “Almost four years after the retirement freedoms were introduced the Government has finally taken a much-needed step to tackle the scourge of pension scams.

“However, prohibiting cold-calling is only part of the solution and will by no means eradicate the threat of scam activity altogether. Pensions remain a juicy target for fraudsters and some will inevitably look to circumvent the ban or simply ignore it altogether.”

The Department for Work and Pensions says that one of the most common methods used by scammers to commit pensions fraud is through cold calls.

Research by the Money Advice Service suggests that there could be as many as 8 scam calls every second – the equivalent of 250 million calls per year.

John Glen, economic secretary to the Treasury, said: “Pension scammers are the lowest of the low. They rob savers of their hard-earned retirement and devastate lives. We know that cold-calling is the pension scammers’ main tactic, which is why we’ve made them illegal.

He urged savers to seek independent advice about making an important financial decision.

According to the FCA, pension scammers stole on average £91,000 per victim last year.

Pensions minister Guy Opperman said: “Pension scams are despicable crimes, fleecing people of the retirement they’ve earned by doing the right thing, working hard and saving for the future.

“Banning pensions cold-calling will protect people from these callous crooks and ensure fraudsters feel the full force of the law.”

• Editor's Note: story updated 9.25 am to add further comment.

 

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Last modified on Wednesday, 09 January 2019 11:01
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