The day when pension cold-calling will finally be banned is now in sight. On the 10th of May the Financial Guidance and Claims Bill received Royal Assent.
This makes it an official Act of Parliament, and it is due to come into effect as early as June.
About the bill
The Financial Guidance and Claims Bill began as a commitment outlined by the government in June 2017. They pledged to make guidance on money and pensions accessible to all. The bill created one single financial guidance body. This merged existing services including Pension Wise, The Pensions Advisory Service and Money Advice Service. Savers can now access clear and impartial financial guidance on pensions and debts. It also tightens regulations on the activities of pension scheme providers.
The cold-calling ban
One of the most high profile and long-awaited factors of the bill is the ban on pensions cold-calling. This is intended to stem the flow of unsolicited calls attempting to lure savers into transferring their pension pots into illegitimate, unregulated or scam pension schemes.
This ban comes as very welcome news for both the public and regulatory bodies. In 2017 it was announced that around £43 million of savers’ pension money was lost to pension scams since 2014. Much of it was off the back of pensions cold-calling. The upcoming ban covers text messages, emails and other direct communications in addition to traditional telephone cold-calling. It applies to all firms that do not already have a connection with the customer they are contacting.
TheFinancial Guidance and Claims Bill and SIPPs
The new Financial Guidance and Claims Bill is a big step forward. It prevents customers from falling victim to pension scams. For savers looking into a Sipp, the bill and pension cold-calling ban will minimise the risk of falling victim to fraud.
The new law will also require trustees and pension providers to encourage customers to seek impartial pension guidance from the new single guidance body. This will provide a greater level of protection for customers. It will also make it much harder for SIPP scheme providers or brokers to tempt savers into investing in unsuitable schemes.
Does the Financial Guidance and Claims Bill provide 100% protection from scams?
There are loopholes and other ways that scammers and irresponsible pension providers can get their hands on pension funds, and so everyone should remain vigilant despite a ban.
People will be able to enjoy no more nuisance calls, emails and texts from unfamiliar pension scheme providers. However, the barriers should still remain firmly up just in case. For example, there are some MPs who showed concern that this ban may leave a loophole for unregulated ‘introducers’ conducting face-to-face marketing. This most aggressive form of cold-calling involves anything from knocking on doors to conversations that take place at roadshow events. It has led MPs to request clarification on whether this form of approach will be covered.
With this in mind, customers should always take the following precautions:
Ignore cold callers. Always hang up or do not respond if you receive a call, text or email from an unknown company.
Find a legitimate adviser. Not all advisors are the real thing. Make sure they are registered with the Financial Conduct Authority (FCA) before accepting advice.
Don’t allow yourself to be rushed. A key trick used in mis-selling is pressuring. This is done using ‘time-limited’ deals to tempt savers into signing up. Always take your time and seek impartial advice if you’re unsure.
Finally, always do your own research. If something sounds too good to be true, it usually is. Don’t be drawn in with promises of high returns and low risk.
If you think you may have been mis-sold a Sipp uou could be owed compensation. Give our legal experts a call or use our contact form to get in touch today.