The ban on pensions cold calling to crack down on scammers is slowly moving forward.
The government has published draft regulations aimed at stopping fraudsters from making unsolicited telephone calls about pensions.
The consultation paper also confirms the new law will go before Parliament before the end of the year.
Although responses to the consultation called for a wider ban on cold calling by text and email, the government wants to stop the scourge of telephone calls as soon as possible with further legislation to follow.
“Pension scams can have devastating consequences, such as the loss of an entire pension fund. On top of this, the chances of recovering these savings are very low, leaving most victims without the means to fund their retirement,” says the consultation.
Pension fraud
“Cold calling is the most common method used to initiate pension fraud. The serious consumer detriment caused by pensions scams means that the government has chosen to intervene directly to implement a pensions cold calling ban.
“Some respondents suggested the scope of the ban should be widened to include other forms of unsolicited communication on pensions, though many noted that delivering the pensions cold calling ban as quickly as possible should be a priority and must not be delayed.”
The government also revealed many responses offered views on how to deal with a broader range of financial scams and suggested rules requiring retirement savers to take independent financial advice before moving their pension and stricter regulation of unregulated investments.
Many of these responses were from pension providers and financial firms.
The new regulations allow regulated financial advisers and companies to contact customers about their pensions, but ban lead generation firms.
Illegal calls
“This means the majority of pension cold calls will be illegal,” says the consultation paper.
Research published by pension provider Aegon revealed that cold callers contact more than 11 million people a year about moving pensions.
Around 250 million scam calls are made a year at a rate of eight every second.
Consumer watchdog the Financial Conduct Authority reported that in the year to the end of November 2016, 8,277 inquiries were received relating to potential unauthorised activity, which led 521 official enquiries and 16 investigations.
While the FCA said it resolved 156 matters through correspondence with firms, it also planned to return £1.9 million to out-of-pocket investors where cases led to court action.
