The Work and Pensions Committee has called on the government to act now to protect savers’ pensions from cold calling scams.
The committee has advised the government to add an amendment to the Financial Claims and Guidance Bill which is currently making its way through the parliamentary legislative process.
Moneywise reported earlier in the year that the government had announced a ban on pensions cold calling, but failed to set a date for implementation.
These calls therefore are a signal that MPs believe immediate action is necessary to prevent more savers and pensioners falling victim to cold calling scams. The committee claims that official figures on the scale of pensions scams could be “grossly underestimated” and that the true number of victims could remain unclear for years. What is clear, however, is that cold calls are the leading means for which scammers prey upon innocent people.
Chair of the committee Frank field MP says: "Every day that passes without a ban, people are being avoidably conned out of their life savings. There is no need to overcomplicate this: our proposal would see an enforceable ban in place by summer, closing at least one door on rafts of scammers at a stroke.
Low saver engagement and high financial value makes pensions rich pickings for scammers offering fantastical returns or seemingly clever advice. The strongest weapon in the armoury against this is good advice and guidance - people just aren’t taking it.
Making guidance the default option combined with the ban on cold calling would be a simple but big step forward in consumer protection in the era of pension freedoms. The government should use the Bill that has just arrived in the Commons to legislate to protect pensions now."
‘Widespread support’ for a ban
Tom McPhail, head of policy at Hargreaves Lansdown comments: “There is widespread support across the pensions industry for the government to do more to help protect investors from fraudsters. A ban on cold calling and better guidance are both likely to help, however it is important any interventions are carefully thought through.
“The ban would have to be policed and would have to avoid interfering with legitimate business activity; guidance at retirement is useful for many but it is questionable this can be delivered effectively to all those approaching retirement by public services alone. If it is to be made the default, the government should explore how to harness the resources of the pensions industry to engage and guide its customers.”
Former pensions minister and current director of policy at Royal London Steve Webb comments: ‘There can be no excuse for the government continuing to delay a ban on cold-calling. With every passing week, more and more people are being scammed, and a scam often starts with a call or email out of the blue. The scammers get more inventive and more creative with every passing week, and the danger is that regulators are always two steps behind’.