A BAN on pensions cold-calling came into effect this week, meaning anyone who receives an unsolicited call encouraging them to transfer their pension can now be assured they are talking to a fraudster.
Though a ban was first mooted two years ago, the UK Government has finally taken action after research from the Money Advice Service suggested that there could be as many as eight scam calls being made every second, the equivalent of 250 million every year.
While not every call will be successful, City watchdog the Financial Conduct Authority (FCA) found that last year an average of £91,000 was stolen from the pension of each person duped by scammers.
Guy Opperman, the minister for pensions and financial inclusion, said that putting a ban in place gives savers protection from “these callous crooks” while at the same time ensuring that “fraudsters feel the full force of the law”.
The ban will be enforced by the Information Commissioner’s Office (ICO), which has the power to impose fines of up to £500,000 on companies and individuals that plague people with nuisance calls.
“These calls cause untold misery to thousands of people and we are pleased that the law now offers greater protection to stop them being scammed out of their hard-earned pensions by unscrupulous operators,” ICO investigations manager Andy Curry said.
However, just because calls have been outlawed and those who flout the ban will face hefty penalties does not mean scammers will be stopped in their tracks.
Indeed, as Margaret Snowdon, chair of the Pension Scams Industry Group, said “a ban on cold calling will not deter all scammers”.
Older pension savers, who have been able to withdraw their pension savings at 55 since 2015, are thought to be particularly vulnerable to scammers, with the FCA and the Pensions Regulator last year launching an awareness campaign aimed specifically at the 45 to 65 age group.
Research released by the two regulators last month suggests that those within that group could be especially susceptible to scammers precisely because so many of them believe they are unlikely to be targeted, with 21% believing themselves too savvy to be scammed while 18% felt their pension pot would be too small to be of interest to fraudsters.
However, Nicola Parish of the Pensions Regulator noted that “every pension holder is a potential scam victim” while Mark Steward of the FCA said that even those who think themselves savvy need to be aware that “pension scams are often very sophisticated and difficult to spot”.
“Scammers will target people from all walks of life and with any size pension,” Mr Steward said.
So, while the ban on making cold calls is now in place, with no definitive means of stopping cold calls from being made, the onus in effect remains on pension savers to protect themselves against scammers.
This creates an issue in itself, according to Kate Smith, head of pensions at Aegon.
“While the ban will go some way in preventing scam activity and protecting individuals and their savings, there is still considerable work to be done to educate the public so people are aware that cold calling is illegal,” she said.
In light of this, as part of their ScamSmart campaign the FCA and Pensions Regulator are urging everyone to reject any unexpected pension offer they receive, whether it is made via an unsolicited call, online or on social media.
Anyone who has taken steps to make changes to their pension should also check who they are dealing with before making any firm commitment. Any legitimate financial adviser or pension company will be authorised by the FCA, whose register can be checked by calling 0800 111 6768.
The regulators have stressed that savers should not be rushed or pressured into making any decision about their pension and should also consider getting impartial information and advice on any changes they are considering, no matter how small.
Mr Opperman is urging anyone who does receive a cold call to “get any information you can” from the caller so that it can then be passed on to the ICO to investigate.
However, for Tom Selby, senior analyst at pensions business AJ Bell, there is only one course of action pensions savers should take if they get a call: hang up.
“The message to retirement savers from now on is crystal clear: if someone you don’t know calls out of the blue about your retirement pot, hang up the phone,” he said.