The government has announced that it will introduce its long-promised ban on pensions cold calling “when parliamentary time allows”, putting to bed concerns that a second consultation would further delay the legislation.
The ban, which will include text and email messages, was originally introduced in chancellor Philip Hammond’s autumn statement in November last year. Part of the financial guidance and claims bill, it was dropped before the general election as part of the wash-up process.
The ban will be enforced by the Information Commissioner’s Office. It will be accompanied by revised HM Revenue & Customs rules stopping scammers from setting up small self-administered schemes sponsored by dormant companies, a feature of many recent scam transfers.
Nobody who is not a criminal will call you about your pension
Ros Altmann
Guy Opperman, minister for pensions and financial inclusion, said in a statement: “If people have saved for a private pension, we want to protect them. This is the biggest lifesaving that individuals normally make over many years of hard work. By tackling these scammers, people should know that cold calling, apart from exceptional circumstances, is banned.”
He also cited newly released figures, showing that scammers wrongfully acquired nearly £5m of pension money in the first five months of 2017, as the government’s motivation for introducing the ban.
Scammers seize upon delays
About £43m is thought to have been skimmed off pots since April 2014, representing an average loss per member of around £15,000.
However, the damage done by scammers in 2017 will also demonstrate the impact of the various delays to the legislation’s passing.
“It’s disappointing it has taken this long for serious action to be taken, and there is no doubt many people have been scammed out of their pensions during that period,” said Tom Selby, senior analyst at AJ Bell, who nonetheless welcomed the decision.
“It’s concerning the government haven’t actually set an implementation date – there’s a big risk this will just keep being sidelined, particularly with Brexit taking priority over all else,” he added.
A spokesperson for the Department for Work and Pensions confirmed that the measure would not be subject to a fresh consultation, and added: “We’ll legislate when parliamentary time allows.”
Timeline is uncertain
Ian Neale, director at policy specialists Aries Insight, said that progress on legislating a ban “depends on the degree of political pressure which ministers feel”.
He explained that if this announcement of a cold-calling ban “whips up a storm in the press, then we may see it sooner rather than later, but I think it must be pretty close to the top of the priority list at the moment”.
In the recent past, pension transfers have been the main target of pension scammers. “But the advent of flexible access is a new honey pot, and there are more and more scammers piling into this,” Neale added.
While a cold-calling ban could help raise awareness and protect people, it would certainly not be the end of scams. The most obvious tactic that scammers are increasingly adopting is to move their operations offshore, Neale noted.
“The government might be limited to making recommendations in this area in the form of guidance,” he said, suggesting that individuals could consider investing in technology to filter out all calls overseas.
“It is problematic. You can make something illegal, but it doesn’t necessarily stop it happening, as we all know,” said Neale.
Ban represents progress
However, said Ros Altmann, a former pensions minister and peer, the ban would allow the government and industry to send out a clear message to the public, namely that “nobody who is not a criminal will call you about your pension”.
Altmann is currently drafting an amendment to the financial guidance and claims bill, which would see the ban brought into legislation already under consideration by parliament.
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However, she accepted that this would not be possible for the restrictions on setting up SSASs, and feared that the government would block the swift passage of the ban in favour of bundling the two measures together in law.
“It’s important for the industry to do more to tell people before they do anything… they should call Pension Wise or a financial adviser or both,” she added, while recognising that schemes and the industry have been hamstrung in some attempts to tackle scams.
“If you remember the Royal London case, they tried to protect [the member] and got hauled over the coals by the regulator, which is ridiculous,” she said.
