Government to confirm ban on pensions cold-calling, including emails and text messages – but no date set for implementation
Measures will make it tougher for scammers to set up fraudulent schemes and hand extra powers to pension providers to block suspicious transfers
There will be two exemptions from the proposed ban: calls where consumers have expressly requested information from a firm, and those where an existing client relationship exists
Tom Selby, senior analyst at AJ Bell, comments: “Pension scammers have already done huge amounts of damage, defrauding hard-working savers of millions of pounds and causing untold emotional harm to thousands of people. Often the victims are elderly and vulnerable, with little chance to recover the money that is lost. Scams also severely damage confidence in pensions and risk putting people off saving for their financial future.
“The measures announced by the Government should put a severe dent in the business models used by these fraudsters, giving savers more confidence their valuable pensions will be safe from criminals. However, it is concerning there remains no set date for implementation and we urge policymakers to fast-track these vital protections through Parliament as a matter of urgency.
“The fact emails and text messages will also be covered by the ban means savers can be absolutely certain that if someone they don’t know contacts them out of the blue about their pension, they simply should not engage with them. That means don’t email, don’t text back and hang up the phone.
“This must be seen as the start as the fightback against scammers rather than the end, however. Policymakers should monitor the effectiveness of these measures closely and consider further changes if savers continue to be pick-pocketed by fraudsters.
“It’s also important to note that this will not stop cold-calling or pension scams. Fraudsters will seek to exploit any loopholes in the rules, and many of the outfits involved will simply move their call centres abroad to avoid the ban.
“But the message this intervention sends to savers is hugely valuable and should go some way to reducing the number of people who get conned out of their life savings.”
Pension scams clampdown – background
The Government announced its intention to make life more difficult for pension scammers in November last year. However, the response – like much of public policy – was interrupted by Theresa May’s decision to call a snap general election.
The original consultation contained three key proposals:
Banning cold-calling in relation to pensions
Limiting the statutory right of a member to transfer
Only allowing Small Self-Administered Schemes (SSASs) to be set up by an active company
All three of these proposals will be implemented from [date], while the cold-calling ban will also cover unsolicited texts and emails.
You can read more detail on the original plans here.
How to protect yourself from falling victim to a pension scam
1. If someone calls you out of the blue to talk about your pension, hang up!
I’m sure at some point you’ve received a phone call from someone you don’t know claiming to offer an incredible investment opportunity for your savings or a ‘pension review’ service. If this happens, hang up immediately! Equally, don’t respond to text messages or emails from someone you don’t know claiming to hold the key to retirement nirvana. In all likelihood this will be a scammer phishing for victims, so whatever you do don’t take the bait.
2. Don’t deal with unregulated ‘advisers’
While telephone, text and email remain the weapons of choice for the modern con artist, some continue to knock on doors; usually targeting older people they think are more likely to be vulnerable. So make sure you only deal with FCA-regulated advisers – this is particularly important as if you are sold an investment by an unregulated individual, you won’t have recourse to compensation. You can check if someone is a regulated adviser by searching the FCA register.
3. Be wary of overseas investments
Scammers often promise double-digit returns through exotic investments in far-flung locations. So if you’re told you can get 10%+ annual returns from a teak plantation in South American or a hotel room in Spain, tread carefully and do your due diligence. Often fraudsters will advertise investments in an asset that doesn’t exist or hasn’t yet been built, so don’t hand over your cash unless you’re 100% confident you’re being sold a genuine, bona fide investment.
4. Watch out for schemes offering ‘guaranteed’ returns
Nothing, and I mean nothing, is guaranteed when it comes to investments. The closest thing you’ll get are Government bonds and final salary pensions – ironically the very things scammers are often trying to part you from. So if a company you’ve never heard of says it can deliver GUARANTEED returns of any amount, don’t touch them with a barge pole.
5. Don’t rush to make a decision
Ultimately if you want to invest in something high risk or unregulated, there is nothing to stop you. But don’t be forced into doing something you aren’t comfortable with and might regret by a pushy salesman desperate to boost his own commission. Your pension might just be the most valuable asset you ever own, so invest it wisely.