The government has revealed new plans to tackle the problems caused by pension cold-calling operations. A new ban on the practice has been put forward to protect savers from being targeted by unscrupulous pension scammers and companies.
In addition to a ban on pensions cold calling, the new legislation will also allow for measures to ban the sending of unsolicited pensions-related texts and emails.
HMRC intends to tighten up the rules in order to prevent scammers from targeting savers with fraudulent pension schemes. It will also ensure that only active companies producing regular and up-to-date accounts can register pension schemes.
The penalties will be severe with firms making cold calls without the customer’s prior consent and businesses making calls to individuals with whom they have no existing relationship will incur fines of up to £500,000.
The announcement of the ban on pensions cold-calling comes as newly-published figures have revealed that nearly £5 million was stolen from savers by pensions scammers during the first five months of 2017. An estimated £43 million in pension savings has been stolen by criminals since April 2014.
Commenting on the ban, Guy Opperman, Minister for Pensions and Financial Inclusion, said: ‘If people have saved for a private pension, we want to make sure they are protected. This is the biggest lifesaving that most individuals usually make over many years of hard work.
‘By tackling these scammers, people should know that cold-calling, apart from exceptional circumstances, is banned.’
Nathan Long, senior pension analyst at financial advisers Hargreaves Lansdown, said the rules should limit the options for scammers. “Clamping down on calls, texts and emails won’t stop the scammers, but it sends a loud and clear message to be on your guard if you are contacted out of the blue,” he said.
The ban will be enforced by the Information Commissioner’s Office (ICO) once it comes into effect. Legislation in regard to the ban will be introduced ‘when parliamentary time allows’.
A typical scam is to persuade people to invest their savings into a plan which doesn’t exist or will not make the returns promised. If a fraudster targets those under 55 then they will also incur severe tax penalties for withdrawing their funds early causing them even more problems.
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