Urgent government action to introduce legislation banning cold calls in the UK is needed as part of a wider crackdown on scammers, senior analyst at AJ Bell Tom Selby has said.
Unregulated firms are continuing to attempt to coerce investors to move their hard-earned pensions into risky investment vehicles, Mr Selby said.
Such schemes often promise huge returns which fail to materialise.
Cold-calling is a tactic used by many of these firms to target unsuspecting victims. On its website the Financial Conduct Authority warns being cold called about an investment opportunity usually mean it’s a high risk investment or a scam.
According to AJ Bell, making this activity illegal would create a valuable barrier between savers and those who want to take their money, particularly in the wake of pension freedoms.
Mr Selby said: “History will reflect poorly on a government that introduced freedom and choice in pensions, but failed to do everything in its power to protect savers from fraudsters.
“Many questionable transfer requests originate from UK-based call centres, so by banning this practice you could cut off at least one of the heads of what is a many-headed serpent.
“The longer the government delays action, the more elderly and vulnerable people will fall victim to the tactics of these dodgy salesmen.”
He added policy makers should also look again at reintroducing professional trustees for small self-administered schemes, legitimate savings vehicles often abused by fraudsters.
Additionally, Mr Selby argued a reintroduction of permitted investment lists for self-invested personal pensions, akin to those that existed last decade, would help combat pension fraud.
Mr Selby added: “It is vital any interventions focus on stopping the activities of fraudsters rather than targeting perfectly legitimate pension vehicles such as Sipps and Ssas’.”
Ssas’ in particular often receive a bad press because they are “abused by scammers”, Mr Selby said, adding in reality the vast majority of Ssas’ are utilised by small business owners who want to invest in their company.
“Bringing back a sensibly-structured permitted investment list would also help weed out some of the weird and not-so-wonderful investments currently being flogged to savers.”
Daren O’Brien, director at London-based Aurora Financial Solutions said: “I fully agree with Tom Selby that the government should be doing more to outlaw cold calling in general.
“Since pension freedoms were introduced it seems that the FCA and the government don’t want to admit that there is an increased problem with scams regarding pension freedoms and transfers.
“We’re hearing about these scams and problems weekly, the general public must be protected from these scammers as there is no such thing as a free review.”
ruth.gillbe@ft.com
