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At last! Pensions cold calling banned in the UK

On 9 January 2019, a ban on cold-calling about pensions came into effect in the UK. The ban is finally in place, more than two years after the government held a consultation to look at ways to tackle pensions scams, including a cold calling ban.

The consultation was the result of a September 2016 petition set up by Darren Cooke of Red Circle Financial Planning, asking the government to ban all cold-calling related to pensions or investments.

A second consultation was carried out in 2018.

Cold callers face fines of £500,000

Under the new legislation, companies that make unwanted, unsolicited phone calls to people about their pensions will be breaking the law. The ban will be enforced by the Information Commissioner’s Office (ICO) which has the power to fine the directors of cold calling companies with fines of up to £500,000.

This is good news. REDD-Monitor has been writing about boiler rooms and investment scams for six years. I’ve written 210 posts about about dubious investments in carbon credits, biofuels, logging operations, REDD, timber plantations, pyramid schemes, Voice over Internet Protocol (VoIP) schemes, VAT fraud, and bamboo plantations.

Many of these scams were carried out by companies registered in the UK whose high-pressure salespeople targeted retail investors, particularly old and vulnerable people. Many people have lost their pensions to these scams.

In its press release about the ban, the government states that,

Pensions fraud can be devastating, leaving victims without the means to fund their retirement. One of the most common methods used by scammers to commit pensions fraud is through cold calls, which is why the government has taken action. Research by the Money Advice Service suggests that there could be as many as 8 scam calls every second – the equivalent of 250 million calls per year.

John Glen, Economic Secretary to the Treasury, has two pieces of advice for people who are cold called about their pension:

  • get as much information you can and report it to the Information Commissioner’s Office; and
  • seek independent advice if you’re thinking about making an important financial decision.

Lesley Titcomb, chief executive of the Pensions Regulator, states that,

“The cold calling ban sends a very clear message – if anyone calls you about your pension, it’s an attempt to steal your savings.

“The ban draws a line in the sand for scammers. Cross it and you should expect to be prosecuted.”

Only half the battle

REDD-Monitor’s position on the cold calling ban remains as it was during the first consultation.

While the ban on cold calling is welcome, there are two main problems with it. First, it doesn’t go far enough. It only addresses cold calls about pensions. A ban on all cold calls providing financial advice would have been better.

Second, while the ban makes the promotion of pension scams illegal, boiler room companies have the moral compass you would expect from scammers. It’s already illegal to steal someone’s pension, but boiler rooms’ reason for existing is to steal money from the old and vulnerable. They will either ignore the cold calling ban, or find ways around it. Overseas calls, for example, are not covered by the ban.

The first problem could be addressed by phasing in new legislation to ban all cold calls providing financial advice. The government’s summary of the 2018 consultation acknowledges this possibility.

On 18 December 2018, in a written answer in Parliament, Margot James The Minister of State, Department for Culture, Media and Sport, stated that,

[T]he Government is aware that more needs to be done to truly eradicate this problem, and continues to work with regulators and industry to put a stop to these calls.

The ban urgently needs to be backed by a publicity campaign with the clear message that if someone calls you out of the blue about your pension, just put down the phone. Given the current obsession with Brexit in the UK media, such a publicity campaign will not be easy.

What to do if you are cold called

If you are cold called about your pension (or by anyone providing financial advice out of the blue) the safest option is to put down the phone.

You could (before putting down the phone) collect as much information as possible about the caller (without giving away any information about yourself). Having done so, report the call to the Information Commissioner’s Office.

You can do this via the ICO website or by phoning 0303 123 1113.

If you think you’ve been scammed, report the company to Action Fraud (0300 123 2040).

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