PensionsOct 25 2017

New guidance body to send cold calling cases to FCA

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New guidance body to send cold calling cases to FCA

The government’s new combined financial guidance body will have powers to send customers cases which have been the target of cold calling to the Financial Conduct Authority (FCA).

The House of Lords approved yesterday (24 October) three amendments to the Financial Guidance and Claims Bill – legislation which will create the Single Financial Guidance Body (SFGB), which will merge Pension Wise, The Pensions Advisory Service and The Money Advice Service – giving this new organisation more powers to fight pensions cold calling.

The government has been the target of criticism as it has not announced when it will legislate on the cold calling ban.

Announced in August, the planned rules will ban cold-callers who try to scam people out of their pension savings, which will include emails and texts.

Liberal Democrat Lord Sharkey, which announced the proposed changes, said that the first amendment “simply adds consumer protection to the functions of the SFGB”.

The second amendment requires the new body to publish an annual assessment of any consumer detriment.

Lord Sharkey said: “If the SFGB concludes that there are products and services where a ban on cold calling would be conducive to the exercise of its functions, including consumer protection, it must advise the secretary of state to institute such bans.”

This means that “it would no longer be necessary to wait for the legislative vehicle to come along to address the problem of cold calling,” since the secretary of state could ban cold calling for pensions, for claim management companies, for destination management companies and “for any other activity the SFGB considered warranted a ban,” he said.

Amendment seven of the Bill requires the new body to pass on to the FCA casework from consumers in two circumstances.

Lord Sharkey said: “The first is where the SFGB suspects inappropriate, misleading or harassing approaches for debt advice, debt management, pensions access and claims management. We know that such approaches exist.

“The second circumstance is where the SFGB suspects dishonest, unfair or unprofessional conduct by the suppliers of financial services within the SFGB’s ambit. We know that such conduct exists.

“It would be wrong to let information about such wrongdoing have no follow-up and no consequences.”

Lord Sharkey argued that the FCA is the “regulator that is best equipped, best resourced and most experienced in dealing with these issues”.

Baroness Peta Buscombe, under-secretary of state for the Department of Work and Pensions, argued, however, that these changes, specially amendment two, could delay the implementation of the cold calling ban.

Baroness Buscombe said: “If this amendment were passed, the government would first have to wait for the body to be set up. It is not expected to be set up and operational until October 2018.

“Then, recommendations would have to be made to the secretary of state. No doubt, this would not be immediate because this body will have a huge amount of work to undertake when it is first set up.”

This would mean that “it could be at least another year or two before any consideration could be made, prior to a recommendation being put to the secretary of state to introduce such a ban,” she added.

Baroness Buscombe revealed that the government is working on finalising the complex policy details of the pension scams regulation, and intends to publish draft legislation for scrutiny in early 2018.

She said: “Following this, we will legislate at the earliest opportunity. This gives us the opportunity to develop legislation which is more carefully targeted and allows us to make proper provision for enforcement which this current draft does not allow.”

According to research published this month by the Phoenix Group, 12 per cent of consumers have been targeted by fraudsters after revealing personal information.

This figure represents up to 6.4 million people which have been victims of scams.

Today (25 October) the Financial Conduct Authority has made a direct call to the public to report potentially fraudulent investments, as research carried out for the watchdog found more than a fifth of over-55s who suspected they had been contacted about a fraudulent investment in the last three years kept silent about it.

According to the regulator's survey 63 per cent say they would report a suspected investment scam but this is significantly lower than those who would report spilled liquids in a supermarket (84 per cent) or fly tipping in their local area (81 per cent).

maria.espadinha@ft.com