The UK’s Department for Works & Pensions has announced that a scheduled ban on cold-calling British residents to entice them into invest their pension savings in what too often turn out to be fraudulent schemes will also include a ban on emails and texts used for the same purpose.
The announcement, published today (Sunday), is the latest in a series of actions the British authorities have taken recently to attempt to deal with the problem of Britons being scammed out of their pensions by fraudsters.
In a statement on the government’s website, the DWP said the new measures would aim to “protect private pension savers from the threat of unscrupulous pension scammers” by:
- banning cold-calling “in relation to pensions, including emails and text messages”;
- tightening existing HMRC rules “to stop scammers opening fraudulent pension schemes”;
- implementing “tougher actions to help prevent the transfer of money from occupational pension schemes into fraudulent ones”; and
- ensuring that “only active companies, which produce regular, up-to-date accounts, can register pension schemes”, the idea being that by limiting transfers of pension pots from one occupational scheme to another, trustees will be required to ensure that the receiving scheme is regulated by the Financial Conduct Authority, or has an active employment link with the individual, or is an authorised master trust.
The cold calling ban will be enforced by the Information Commissioner’s Office (ICO), the announcement said.
The announcement came as new figures released today showed almost £5m had been obtained by pension scammers in the first five months of 2017, the DWO noted.
It added that an estimated £43m had also been unlawfully obtained by scammers since April 2014, with those targeted having lost an average of nearly £15,000, “as scammers try to encourage savers to part with their money, with false promises of low-risk, high-return investment opportunities”.
It wasn’t immediately clear when the new regulations would come into force. However, the BBC quoted a spokesperson for the DWP as saying the the legislation would be tabled “when parliamentary time allows”, raising, the BBC noted, the possibility “that it could be many months before the [new] rules come in”.
Figures ‘highlight extent’ of pension theft
In a statement accompanying the announcement, Guy Opperman, minister for Pensions and Financial Inclusion, said that the figures published today highlighted “the extent to which people’s savings are being targeted and stolen through elaborate hoaxes – leaving them with little opportunity to build up their savings again”.
“That is why we are introducing tough new measures for those who scam,” he added.
“If people have saved for a private pension, we want to protect them. This is the biggest lifesaving that individuals normally make over many years of hard work. By tackling these scammers, people should know that cold calling, apart from exceptional circumstances, is banned.”
Old Mutual Wealth reaction: Govt ‘right’ to take action
Reacting to the news of the widening of the cold-calling ban to include texts and emails, Old Mutual Wealth head of retirement policy Jon Greer said the UK government was “right…[to take] steps to close loopholes that have enabled unscrupulous individuals to set up pension schemes” as well as to have given trustees “greater power to block transfers if they have concerns”.
But he noted that, as “the DWP stats published today show, [scammers] have successfully stolen millions from retirement savings” without much stopping them, suggesting that “if they are already willing to break the law, a cold calling ban won’t stop them”.
“So the main benefit of this ban is really to raise public awareness and make sure they are suspicious of any cold calling activity,” Greer went on.
“Pension freedom reforms opened up opportunities for people in retirement, but they also signaled open season for scammers.
“Let’s face facts, many cold callers today will already be operating illegal pension scams.”
Callers, therefore, needed to know that if they receive a unsolicited call offering, for example, a “pension review”should “always hang up and instead discuss your options with a financial adviser that you know and trust”, Greer said.
As reported in December, the UK government consulted the pensions industry and others on a package of measures aimed at putting an end to the practice of luring British pension-scheme owners into transferring their pension pots into fraudulent schemes, which, as the figures released today show, has increased sharply in the 16 months since new legislation that was designed to make it easier for people to access their pension pots from the age of 55 came into force.