Labour MP Frank Field is questioning if the cold calling ban will be effective at stop 'factory gating' practices, which were brought to light with the British Steel transfer scandal.
In a letter to John Glen, economic secretary to HM Treasury, the chairman of the Work & Pensions select committee welcomed the introduction of the Financial Guidance and Claims Bill, which received Royal Asset yesterday (10 May).
However, Mr Field argued one remaining practical question relates to the definition of what constitutes unsolicited direct marketing.
He said during the committee's inquiry in the British Steel Pension Scheme (BSPS), MPs heard "numerous examples of the practice of 'factory gating', whereby promoters working on behalf of financial advice firms would approach scheme members in person".
He said: "These approaches were targeted at a group of people who were already having to make vital decisions about their pensions.
"In such circumstances it is easy to imagine how a skilled marketer could use the opportunity of a face-to-face conversation to gain the trust of a 'prospect' and persuade them into a particular course of action.
"When the 'cold call' is in person, it is not simply a matter of putting the phone down or deleting a spam email."
Steelworkers were given until 22 December to decide whether to move their defined benefit (DB) pension pots to a new plan being created, BSPS II, or stay in the current fund, to be moved to the lifeboat Pension Protection Fund.
The scheme has about 130,000 members of which 43,000 are deferred, meaning transferring out of their pension was an option for them.
FTAdviser reported in November that several steelworkers appeared to be transferring out their pensions after being lured by cheap deals by unregulated introducer firm Celtic Wealth Management & Financial Planning, which then referred the clients to advice firm Active Wealth.
The firm, the first one to be stripped of its transfer permissions, has now entered into liquidation.
FTAdviser reporter earlier this month that advisers who look for pension transfer business outside workplaces risk breaching the Financial Conduct Authority (FCA) rules, as more cases of the practice come to light.
Due to these practices, Mr Field is questioning the government if the Financial Guidance and Claims Bill ban on unsolicited direct marketing in connection with pensions will also apply to in-person approaches.
He said: "If not, what other measures can be used to outlaw such approaches as well as the commercial use by third parties of information obtained thereby?"
Mr Field is also asking HM Treasury if it is examining more generally the role of unregulated introducers in promoting pension transfers and generating leads for financial advice firms, and if this activity should be brought within the FCA's regulatory regime.
The cold calling ban could be implemented by June, since Treasury introduced a new amendment to the Financial Guidance and Claims Bill, stating that the regulations underpinning the ban should be made by the secretary of state before the end of that month.
Some experts have warned that the cold-calling ban will not stop pension scams.
maria.espadinha@ft.com
