A government ban on companies making unsolicited phone calls about pension products has come into force from today.
Firms found guilty of “cold calling” individuals could be fined up to £500,000 (€555,000) under the new law.
The UK regulator, the Financial Conduct Authority (FCA), has estimated that fraudsters stole an average of £91,000 per victim in 2018.
FCA-authorised staff, pension managers and trustees are not affected by the ban.
John Glen, economic secretary to the UK treasury department, said: “Pension scammers are the lowest of the low. They rob savers of their hard-earned retirement and devastate lives. We know that cold-calling is the pension scammers’ main tactic, which is why we’ve made them illegal.”
People who have received such calls should report the company to the Information Commissioner’s Office, Glen added.
⚡️Pensions cold calling is now illegal.⚡️— HM Treasury (@hmtreasury) January 9, 2019
Firms that breach the ban could face a fine of up to half a million pounds, protecting vulnerable consumers from potential pension scammers.https://t.co/X6eC9eld06 pic.twitter.com/E4RtpGXIqD
However, some experts have warned of the ban’s limitations. Alistair Wilson, head of retail platform strategy at Zurich, said: “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. Overseas calls are not covered by the clampdown, presenting a potential loophole for scammers operating from overseas.
“For the 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.”
Local authority funds urge regulatory rethink on data
The Local Government Pension Scheme’s (LGPS) Scheme Advisory Board has urged the Pensions Regulator not to bring formal action against local authority schemes that are lagging behind on data and administration improvements.
In a letter sent to TPR late last year, advisory board chair Roger Phillips highlighted that LGPS staff were “often facing serious difficulty in fulfilling all their statutory responsibilities to the highest possible standard against financial constraints and stringent recruitment and retention policies”.
TPR has been clamping down on data quality and record keeping in recent months, while LGPS funds have struggled to collect information from all affiliated employers. The London Borough of Barnet was fined £1,000 for failings in this area in 2017.
However, Phillips urged TPR chief executive Lesley Titcomb to “work jointly” with the LGPS “in communicating any lessons learnt from your engagement with a selected number of LGPS administering authorities to the scheme as a whole”.
“We see this as an alternative to enforcement action against any of the selected funds that you consider to be non-compliant with your codes of practice,” Phillips added. “The board is clear that the threat of enforcement action would not be helpful in creating an environment where administering authorities can be fully open and willing to resolve any shortcomings identified by your casework teams.”