The much-anticipated cold calling ban on pensions has come into effect today, which could leave scammers with fines of up to half a million pounds.
What does the cold calling ban mean for you?
According to the Financial Conduct Authority, (FCA), the average pension scam costs the victim £91,000. Many have lost their life savings and the government’s action will save many vulnerable people.
Our thoughts
Our expert, Glyn Taylor, thinks it’s a good start, but it’s not enough.
He said: “These rules are a good starting point. Cold calls often lead to investors losing huge sums of money in unregulated schemes without understanding the risks.
The majority of the cases we take on are from people moving their pensions following advice from unregulated advisers. Our clients are often approached via a cold call offering a free pension review. We believe the legislation will be a positive step from this perspective.
While this is a move in the right direction, the ban on cold calls does not cover overseas companies which in our experience, is where the majority of bad investment advice originates. Therefore, the new rules do not cover the root of the problem.
Unfortunately, scam operators continue to evolve their business practices and scams are becoming more and more sophisticated. Excluding overseas calls could actually lead to a rise in the number of pensions being shifted into unregulated and risky SIPPs.
We might also see unregulated advisors moving out of the UK and continuing their operations overseas to get around the ban. As a result, it will make it more difficult for customers to recoup any losses.
Overall, this law is going to raise public awareness about people’s rights when being advised on their pensions. The ban will not solve the problem completely, but it will give consumers more power to take the investment decision which is right for them.”
How can you help?
If a company cold-calls you to offer a free pension review or discuss your financial future, write down their details. You can report the incident to the FCA to help prevent these cold-callers scamming others.
Scammers cannot always instantly be recognised and in many cases, come across as genuine. If you are unsure about what a cold calling scam sounds like, you can read our blog on how to spot a scam here.
If you think that you have invested in a scam pension scheme after a cold cold, get in touch. Our experts can offer support and advice with your case.