Cold calling can be nuisance, it can be irritating and it for some of us it can be scary. For the most part, calls are genuine, made from genuine companies looking to sell you genuine products. However, every now and then you might receive a cold call that just doesn’t sound quite right.
According to the Money Advice Service, almost two thirds of us have received a suspicious phone call in the past 12 months. Despite plenty of warnings about cold calling scams, we still fall for their tricks, with around 7 per cent of us having experienced telephone fraud in the past few years.
In the past, scams often focussed on bogus investments, callers posing as our banks to get our credit card details, or those encouraging us to send money to fake charities. But since 2015, there’s been a new target for fraudsters to aim for, and this one could just ruin your life.
What’s the problem?
In 2015, we saw a radical change in the world of pensions. The government announced a new set of ‘pension freedoms’, which would allow us greater control over how much pension we take out, when we take it out and where we invest it. This instantly gave millions of Britons access to billions of pounds worth of pension funds, and gave scammers a brand-new way to steal money.
The Money Advice Service estimates that there are around 250 million cold calls made every year in regard to pensions. Some of these have been linked to fraudulent schemes, with plenty of heart-breaking stories of lifelong savers, now faced with the prospect of no longer having a pension. In fact, 97 per cent of ‘pensions liberation’ complaints originated with a cold call.
Citizens Advice have calculated the number of people receiving cold calls about pensions since the freedoms came into force as 10.9 million. Speculative commentary suggests that scammers are getting more and more sophisticated with their tactics, and that the problem is increasing, rather than going away by itself.
What is the government doing?
The UK government held a consultation on the proposed ban to cold calling about pensions, which ended in February this year. They are yet to publish a response to the consultation, so the outcome is not yet known. Originally, the cold calling ban was due to be published as part of the Financial Guidance and Claims Bill, but when it was released on July 22nd, there was no mention of such a ban.
Speaking at the House of Lords, Baroness Buscombe, Parliamentary Under Secretary of State for the Department for Work and Pensions, said that the response to the consultation would be published ‘shortly’. She said that the issue was a complex one, and would require detailed and careful consultation over the year. In the meantime, millions of pension holders are still at risk of these increasingly sophisticated scams.
Can the government really protect us?
In short, the answer is no. A cold calling ban, whilst very welcome by many, could only be enforced in the UK. Enforcement would most likely be handed to one of the current regulators, such as the Financial Conduct Authority (FCA), the Information Commissioner’s Office (ICO) or Ofcom. This would not address any calls coming from overseas, of which there are many, as the UK government does not have any jurisdiction over companies not registered in the UK.
This doesn’t mean that the ban would fail, however, as consumers would be aware that any cold caller wanting to talk about their pension is more than likely a scammer, and would take appropriate action. However, the Association of British Insurers (ABI) has pointed out that such narrow legislation would only drive scammers towards other channels of communication, such as email, text and post.
Banning cold calling is certainly a step in the right direction, but ultimately, it’s down to us to protect our own savings by being aware of (and not falling for) these scams. If you’re worried about being conned out of your pension, seek professional financial advice in a proactive fashion. Talk to PensionWise for an overview, or to us at Integral for detailed guidance, and never engage with anyone who approaches you for a pensions discussion without your invitation.