Government to crack down on scammers who persuade savers to transfer money from pension accounts into fake schemes.
A ban on cold-calling by pension companies will include texts and emails, the government has announced, as it cracks down on scammers who target savers’ retirement funds.
Almost £5m was lost to fraudsters in the first five months of 2017, said the government, and it was estimated that since April 2014 a total of £43m had been taken. People targeted by scammers lost an average of £15,000 each.
Typically, fraudsters contact savers and offer low-risk investments with high returns, persuading them to transfer their money from their pension accounts into fake schemes. When new rules allowing people access to their funds were introduced in April 2015, there were warnings that this could prove costly to consumers unable to distinguish between scam calls and marketing by genuine firms.
The cold-calling ban will prevent all cold calls, emails and texts about pensions, and will be enforced by the Information Commissioner’s Office. The ICO has powers to fine companies up to £500,000 if they break its rules, although it can only take action against companies based in Britain. There will be two exemptions to ensure legitimate calls are not affected – companies will still be able to contact consumers who have expressly requested information from them, and will still be allowed to make marketing calls to existing clients.
Along with the ban, there will also be new rules to make sure that only active pension schemes with up-to-date accounts can register with HMRC.
While the rules on registration will form part of the finance bill, the cold-calling ban will need separate parliamentary time, so it is unclear when it will come into effect.
The pensions minister, Guy Opperman, said: “If people have saved for a private pension, we want to protect them. This is the biggest life’s saving 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.”
Nathan Long, senior pension analyst at financial advisers Hargreaves Lansdown, said the rules should limit the options for scammers. “Clamping down on calls, texts and emails won’t stop the scammers, but it sends a loud and clear message to be on your guard if you are contacted out of the blue,” he said.
“Making pension schemes harder to set up and ensuring transfers only proceed to appropriately regulated schemes will all help to blunt the damage that scammers can inflict moving forward. But pension savers must remain vigilant,” he said.
Source: The Guardian