Pension cold calling is to be banned by the government. It’s introducing new measures which will outlaw cold calling – as well as emails and texts – from companies about pensions.
Q. When will the ban come in?
A. The government hasn’t said. It announced the revised plans today (August 20th). The government had originally announced that pension cold calling is to be banned in the Autumn Statement, but this would only have covered phone calls, not texts and emails as well.
Some experts have said that the proposed ban could be included in the forthcoming Financial Guidance and Claims Bill, although the Department for Work and Pensions would only say that the bill would be debated ‘when parliamentary time allows’. This could mean that the ban won’t come in for many months.
Q. What exactly has the government announced?
A. Today the government has announced that firms will not be able to cold call someone about a pension unless they have permission from them beforehand. They will also not be able to send texts or emails to them, without prior permission.
SAVVY TIP: If someone does call, text or send an email about pensions without permission, they could be fined up to £500,000 by the Information Commissioner.
The government also said it will tighten up the rules so that
- Only companies that produce active accounts will be able to set up pension schemes. One of the problems in the past has been that scammers have found it too easy to set up pensions.
- Trustees (people who run certain types of employer-based pension schemes) will have to make sure that if someone wants to transfer their pension, the pension scheme they want to transfer their pension to must be registered with the Financial Conduct Authority (FCA), or it must have an active employment link with the person or it must be what’s called a ‘master trust’.
SAVVY TIP: A master trust is a type of pension where several employer pension schemes are held under one umbrella. Each employer’s pension has its own section of the master arrangement.
Q. How much is lost to pension scammers?
A. The government’s own figures show that people were defrauded out of £5 million of their pensions in the first five months of 2017. It estimates that people have been defrauded of £43 million since April 2014. The pension freedoms were announced in March 2014.
In most cases, people have been encouraged to transfer their pension to supposedly better performing pensions. These pensions either came with high costs and charges or, more likely, were fraudulent schemes where the scammers simply took the money.
I’m glad this ban is coming in, but it should have been in place before April 6th 2015, when pension freedoms were introduced. There were lots of warnings about scams after the then chancellor, George Osborne, announced, in the March 2014 Budget, that the pension rules would change in 2015. There were even more warnings in the months following April 2015.
I’m dismayed it’s taken the government so long to act. It also only included emails and texts in its ban because of lobbying by the industry and consumer groups. That makes me think that the government doesn’t understand how scammers work or doesn’t grasp the extent of the problem.
How to avoid investment scams
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