Ros Altmann, the pensions expert and former pensions minister, has criticised the government’s proposed cold calling ban, saying that the amendments to the bill are “not strong enough”.
Baroness Altmann said the Financial Guidance and Claims Bill, in the Commons today (12 March), will not protect customers adequately in its current form.
Instead is calling on MPs to back alternative amendments by Frank Field, chair of the Work and Pensions Committee.
She said the stronger amendments “would ensure an effective cold-calling ban” and could “ensure huge strides in improving customer protection”.
“I hope MPs will back them. If not, the Bill comes back to the Lords where there may be further attempts to reintroduce the measures. I hope the government will back the Work and Pensions Committee,” she said.
“The government must ensure that the cold calling ban actually works.”
The measures to be voted on in the Bill include banning pesnions cold calling and ensuring people are automatically referred for pensions guidance.
Mr Field’s amendments would include banning the use of leads obtained from cold calling as well as cold calling itself.
“To be effective, it is vital that any ban on cold-calling is backed up by a regulatory ban on use of information obtained as a result of unsolicited approaches," Baroness Atlmann said.
"If product providers cannot sell to a customer who came to them from a cold-call, then the cold-callers could not monetise the leads, thus removing the business rationale for the cold-calling."
The other amendment would ensure that more people receive impartial guidance to help them make the right decision about their pension.
Before they transfer or cash-in their pension, this legislation could ensure they are referred to the new independent guidance body, currently called PensionWise.
“This can protect them against scams and also help them understand the risks of cashing-in too early, tax implications of taking money out of their pensions,” Barroness Altmann said.
“Some pension providers ensure their customers get guidance first, but many are happy for customers to phone their own helplines, which are not independent or impartial and which may not give them the help they need.”
Baroness Altmann said Frank Field’s amendments would ensure providers have a duty to refer people for guidance before they decide what to do with their pension.
“Customers can opt-out, but the process needs to be independent of providers, to ensure people have the best chance to avoid poor products and unsuitable choices,” she said.
"I hope the government will withdraw its own weaker amendments and back those of the Work and Pensions Select Committee.”