Will cold call ban stop pensions scams?

The Government looks all set to perform a remarkable U-turn on pensions cold-calling. In only July this year Baroness Ros Altmann – then minister for pensions – dismissed the case for banning nuisance calls related to pensions and investments, warning the problem would persist because many come from overseas.

Freed from the constraints of office, Altmann became a powerful ally to the cause, backing what providers, experts and advisers had been saying for months. And thanks to the fantastic work of IFA Darren Cooke – whose petition has garnered over 6,000 signatures and helped electrify the campaign – noises from Westminster suggest meaningful action will, at last, be taken.

Be in no doubt – this Government is listening and the opinion of the advice community is being heard.

The next step will be to navigate how to make a ban on cold-calling work so it truly dents the business models of fraudsters without stopping firms from legitimately communicating with their customers. Rules governing the mortgage market, where cold-calling is banned, are an obvious place to start.

Firms cannot cold-call people in relation to mortgages “unless there is a pre-existing customer relationship through which the customer expects unsolicited promotions”. The fact that no such rule exists for pensions and investments looks increasingly like an anomaly, particularly following the introduction of the freedom and choice reforms.

But if victory is secured in the fight to ban pensions cold-calling, it must be seen as the beginning of the journey to ridding the market of scammers, rather than the end. The biggest mistake we could make now is to pat ourselves on the back about a job well done.

Because the one thing we know about fraudsters is they are not stupid. Pension scams are a many-headed beast, and banning cold-calling merely cuts off one of the heads.

Now we finally have policymakers’ attention on the threat posed by scams – both to individuals and trust in pensions as a whole – we need to look at what more can be done.

A nationwide Government consumer awareness campaign about the dangers of pensions fraud would be a good start, while some serious action against scammers – including arrests and convictions – would go a long way to stemming the flow of money out of savers’ pockets and into the hands of criminals.

Regulators and HMRC must also be equipped with the funds and expertise to stay one step ahead of the fraudsters, whose tactics are becoming increasingly sophisticated. Indeed, we have already seen scams morph from basic ‘early pension release’ models into more complicated investment-based frauds involving overseas listed equities.

Government also works with authorities outside the UK to ensure they aren’t being used to circumvent our own rules. Many pension and investment frauds now contain an overseas element – be it the location of the asset involved or the jurisdiction from which a cold-call originated – so working with foreign partners is critical in ensuring any clampdown is effective.

Make no mistake, a ban on pensions cold-calling would be a huge victory for advisers, the industry and, above all, common sense. But it will only be worthwhile if accompanied by a meaningful effort to drive fraudsters out of the retirement market for good.

Senior Analyst

Tom Selby is a multi-award-winning former financial journalist, specialising in pensions and retirement issues. He spent almost six years at a leading adviser trade magazine, initially as Pensions Reporter before becoming Head of News in 2014.

Tom joined AJ Bell as Senior Analyst in April 2016. He has a degree in Economics from Newcastle University.

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