The government has launched a consultation into potential measures to counteract pensions scams, including a ban on cold calling.
Chancellor Philip Hammond announced the consultation on pensions scams in the Autumn Statement 2016.
The consultation puts forward proposed measures to reduce the frequency of pensions scams in three key areas. This includes a ban on cold calling in relation to pensions, limiting the statutory right to transfer to some occupational pension schemes, and making it harder for fraudsters to to open small pension schemes by ensuring that only active organisations can register a pension scheme.
The measures are designed to clarify how pension members can expect to be communicated to regarding their pension arrangements, as well as provide clearer legislative guidance and outlines surrounding these key target areas.
The proposed cold calling ban is intended to catch a wide range of pensions scams, which may include free pensions reviews, overseas investment opportunities or promotions on annuities or drawdown products.
Current legislation dictates that the Financial Conduct Authority (FCA), the Information Commissioner’s Office (ICO), and Ofcom have the power to regulate cold calls to an extent, but not to ban them completely.
The consultation closes on 13 February 2017.
Ben Fairhead, pensions expert at Pinsent Masons, said: “The proposal to introduce a requirement of a genuine employment link to a receiving occupational pension scheme would make it much more difficult for scammers to exert pressure on pensions trustees to transfer funds into suspicious schemes.
“The devil will be in the detail of working out what a ‘genuine employment link’ and ‘regular earnings’ look like, but any change in this area is likely to be an improvement on the current legal position. Recognising and tackling the issue of dormant [organisations] that are all too often used as vehicles for pension scams is similarly encouraging.
“The one fly in the ointment might be the window of opportunity that remains now for scammers before any change to the law is brought into effect, which could be many months away. It would be sensible for the government to think about some interim measures to prevent the sort of upsurge of activity that might otherwise result while the law remains in its current unsatisfactory state.”
