Regulation  

Industry points to risks in cold-calling ban

Industry points to risks in cold-calling ban

The financial services industry has welcomed today's introduction of a ban on cold-calling but many have sounded a note of caution on whether it will stop scammers in their tracks.

The move by HM Treasury, effective from today (January 9), means unsolicited calls about pensions will become illegal and companies which break these rules can face fines of up to £500,000.

Tim Bennett, partner at Killik & Co, said: "Rules that will make pensions cold calling illegal are to be welcomed, albeit they are now well overdue.

"Since pensions freedoms were introduced in April 2015, UK consumers have been more vulnerable than ever to becoming targets for scammers and fraudsters.

"As such, this is an obvious and important step forward provided the FCA can effectively enforce such a ban."

Research by the Money Advice Service suggests that there could be as many as eight scam calls every second – the equivalent of 250 million calls a year.

But Kay Ingram, director of public policy at LEBC, said the ban's effectiveness would depend on the public.

She said: "It has always been illegal to steal someone else’s pension funds and the cold calling ban of itself will not deter determined criminals.

"Its success will depend upon the public having confidence that no legitimate adviser or pension provider would approach them in this way.  The government, pension providers and the regulatory bodies will need to do more to stamp out this crime."

Alistair Wilson, Zurich’s head of retail platform strategy, said the looming launch of a pensions dashboard later this year - which will allow consumers to see all their savings in one place - was likely to make pensions even more tempting for scammers.

He said: "Even with the protection of the law, consumers can’t afford to let down their guard as pension fraudsters are likely to evolve new tactics to sidestep the ban.

"For the ban to be effective, it needs to be backed by a vigorous and ongoing awareness raising campaign.

"This will help to hammer home the message to consumers that any call they receive about their pension out of the blue is a scam."

Mr Wilson said the ban was not without loopholes, such as the fact overseas calls were not covered, meaning scammers operating from abroad could sidestep it altogether.

Tom Selby, senior analyst at AJ Bell, added: "Prohibiting cold-calling is only part of the solution and will by no means eradicate the threat of scam activity altogether. Pensions remain a juicy target for fraudsters and some will inevitably look to circumvent the ban or simply ignore it altogether.

"The message to retirement savers from now on is crystal clear: if someone you don’t know calls out of the blue about your retirement pot, hang up the phone."

According to the FCA, pension scammers stole on average £91,000 from each victim last year.

The ban prohibits cold-calling in relation to pensions, except where the caller is authorised by the FCA, or is the trustee or manager of an occupational or personal pension scheme, and the recipient of the call consents to calls, or has an existing relationship with the caller.