The long-awaited ban on pensions cold calling finally comes into effect tomorrow (January 9th) in a bid to thwart scammers.
From this date, it will be illegal for firms to make unsolicited telephone calls to customers on the subject of pensions. This will include offers for a free pension review.
The ban also extends to cover unsolicited texts and emails. Firms that do not abide by these new rules face fines of up to £500,000. This new regime will be policed by the Information Commissioner.
There has been a big jump in instances of pension fraud since the introduction of the pension freedom rules. Many have been persuaded to switch assets out of company pension schemes and into high risk, unregulated funds as the result of unsolicited calls offering a pensions review.
The Money Advice Service estimates there are 250 million pension scam calls a year. While the Information Commissioner has said this type of fraud cost victims £91,000 last year.
Despite rising incidents of pension fraud there has been a delay in imposing this ban.
The Chancellor, Philip Hammond, first proposed a ban in November 2016. It was then scheduled for implementation in 2017, before being pushed back to summer 2018, then delayed again.
Zurich’s head of retail platform strategy Alistair Wilson says “Although it will sadly arrive too late for some, the ban on pensions cold calling will help to frustrate fraudsters looking to scam people out of their life savings.
“This is a major step forward in the fight against pension fraud and has come at a crucial time for consumers. With the launch of the pensions dashboard on the horizon, scammers could step-up their efforts to deceive savers, who will for the first time be able to see all their pensions in one place.
“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.”
He pointed out that overseas calls are not covered by the clampdown, presenting a potential loophole for scammers.
Wilson adds: “For this 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.”