The UK government is to ban cold calling to sell pension investments. Philip Hammond, the UK chancellor, will announce the ban in his first budget statement tomorrow (23 November).
The government will impose fines up to £500,000 for companies caught cold calling. Pension firms will also be given more powers to block suspicious transfers. This could help stop prevent people handing over their life savings to scammers.
The government’s move to ban cold calls about pensions follows a parliamentary petition calling for a ban on all cold-calling related to pensions and investments. Darren Cooke of Red Circle Financial Planning launched the petition in September 2016.
Cooke told Sky News that,
“Hopefully by banning the cold calls – it won’t necessarily stop the calls – but if people know that that cold call is illegal they will be hopefully more likely to put the phone down and stop the scammer getting hold of their money.
“Some of the offers can be very tempting, they are very often offering high guaranteed but just about believable returns on your investments, usually by investing in property abroad. The scammers can be very very convincing.”
Eight scam calls a second
The government released figures to show the scale of the problem in the UK:
- Each year there are about 250 million scam phone calls in the UK. That’s eight per second.
- 11 million people are targeted by cold call scammers every year
- Savers lost a total of about £19 million to scams in 2015.
I’m sure the government has some very clever people producing these statistics, but I can’t help but wonder how the government knows that there are 250 million scam calls a year.
Research by Citizens Advice found that about 10.9 million people were cold called about their pension last year. I don’t know how Citizens Advice produced their figure, but it’s approximately the same as the government’s figure – about 17% of the population.
Citizens Advice also found that people falling for investment scams lose an average of £20,000.
If the total amount lost is £19 million, then somewhere around 950 people were scammed in 2015 (19 million divided by 20,000). Two observations on this figure:
- I would love to see how the government calculated the figure of £19 million, particularly given the fact that most people don’t report fraud.
- While 950 people scammed is 950 too many, if the figure of 250 million scam calls is anywhere near correct (which is a big if), that’s an awful lot of scam phone calls that don’t produce any money for the scammers.
Just put the phone down
Almost anything that makes scams more difficult to carry out has to be a good thing. So Hammond’s announcement of a ban on cold calling relating to pensions is good news. And Darren Cooke should be congratulated for setting up the petition.
As former pensions minister Ros Altman points out on her website, making cold calling illegal sends a clear signal to people on the receiving end of scammers’ phone calls to just put the phone down:
Well done Philip Hammond – we have to do whatever we can to protect the public against fraudsters. Vulnerable elderly people are being called and offered free ‘pension reviews’ which lead to them losing their entire life savings. We need to be able to give the clear message that if someone contacts you out of the blue about your pension, they are breaking the law, they are criminals. By making cold calling illegal, it is much clearer for the public that they just should not engage with such people.
But Cooke’s parliamentary petition stated: “Cold calling by phone or email for investment or pensions should be illegal.” Why on earth did the government not ban all cold calling, rather than just pensions-related cold calling?
Will banning cold calls work?
The ban on cold calls will be extremely difficult to enforce. The police will have to rely on members of the public reporting cold calls. Action Fraud is already swamped with people reporting frauds. It’s difficult to see how it would cope with potentially millions of phone calls from people reporting cold calls. Or how the police would cope with investigating all these reports of cold calls.
And even if the ban were successful, it would only stop boiler rooms operating from London and the rest of the UK. It would not stop scammers from setting up their boiler rooms offshore.
Perhaps the government should make unregulated investments illegal and clamp down on unregulated companies offering investment advice. Of course, the Financial Conduct Authority would then have to regulate the investment sector. But that is one of the things that the FCA is supposed to do, after all.
Leave a Reply