The proposed ban on cold-calling amid the plight of vulnerable pensioners by unscrupulous scammers, while commendable, threatens to cut off one of the main sources of new business for advisers, according to Will Todd.
The chancellor of the exchequer Philip Hammond mooted a ban on cold calling in the Autumn Statement in the wake of an increase in pension scams.
According to the Treasury, some 11 million pensioners are targeted annually by cold callers and around £19m worth of savings were lost to scams between April 2015 and March 2016.
In the ensuing consultation paper, the government defines various legitimate forms of interaction, and then lists forms of interactions which will be expressly banned.
It proposes a ban on callers who would not fall within the definition of an "existing client relationship". What is more, the ban would also apply to firms that have been passed consumer’s details by a third party.
Mr Todd, chief marketing officer of the Adviser Breakthrough Group, said: “Do you ever get passed information of a potential client from another company or professional? If the answer is yes, you will no longer be able to call that prospect until they have contacted you first.
“This, in a nutshell, would be the successful banning of traditional referrals. Speaking to a number of financial adviser practice owners, this is one of the main sources of new business which will be cut off, alongside following up letters with a phone call.”
He argued that cold-calling carries a stigma because the practice has been misused in other industries to the detriment of advisers who would, at some point, need to pick up the telephone and speak to a prospect for the first time.
Mr Todd said that pension scamming will happen regardless of whether the ban is agreed, but the ban would stifle referrals and “severely” restrict the ability of legitimate advisers to reach out to individuals who would benefit from financial advice.
He added: “Pension scamming will happen if the ban is agreed. Pension scamming will continue if the ban does not get agreed. The industry will be stronger and people will be better protected if we go on the offence rather than go on the defence.
“Every regulated financial adviser should be able to speak to someone and potentially save prospects from scammers, shameful under-performing funds and previous bad advice.”
Adviser view
Kevin Titmus, independent lifestyle financial planner at Greater Manchester-based Future Planning Wealth Management, said: “Cold-calling is not something I would advocate because I do not like being cold called myself. I do not think that something as personal as financial matters should be discussed in great depth with a stranger over the phone. I would rather find new business by myself through effective marketing rather than paying a third party for some leads generated through cold-calling. I’m also an advocate of new business through word of mouth.”
