In January 2019, the government issued a pension cold calling ban for UK firms. But has this ban worked, and what else can we do to prevent the fraudsters?
We take a look at the issues surrounding the pension calling ban, one year on:
Cold calling: a common tactic
Cold calling is one of the most common tactics used by unregulated introducers and out-and-out scammers when targeting people to relieve them of large sums of money from their pension pots.
Despite the ban, fraudsters have found ways to circumvent the rules, or ignored them altogether, hoping that their victims would not have any knowledge of the legislation.
Ignoring the ban carries heavy fines. Cold-callers may find themselves with a fine of £500,000 as a result of breaking the law.
Large pension pots are simply too good to resist for scammers who want to get their hands on thousands of pounds from British savers. Because of dodgy tactics such as cold calling, many Brits are facing retirement with little or no money from their hard-earned savings.
Recent research by The Pensions Regulator (TPR) has found that two-thirds of people would trust pensions advice from someone out of the blue, which is one of the hallmarks of a scam. It also discovered that well-educated people were even more likely to be scammed because of overconfidence surrounding finances. Unfortunately, most people take only 24 hours to consider their options before investing in schemes touted by strangers.
What else can we do?
Since pension freedoms were introduced in 2015, Brits have been able to access their pension pots from the age of 55. Unfortunately, these freedoms have attracted scammers who are looking for easy ways of getting their hands on this money that is now liberated from the system.
It’s clear from TPR’s research that much more needs to be done to educate Brits on their financial choices. It can take many years to save for a stress-free retirement, and just hours to lose the lot. People need to make lengthy and considered decisions before moving their pension pots into different schemes and investments or they could risk losing it all. To start with, education around cold calling needs to be even more robust than it is already.
Our advice to pension holders
The main piece of advice to take on board is; if anyone cold calls you about pensions, hang up the phone. Authentic UK firms are not allowed to call you following the ban, so chances are if you do get called out of the blue, it’s probably a scam.
Cold callers usually begin by offering victims a free pension review and may claim to know facts and figures about your situation. In reality, they will be reading from a script and know very little about your finances.
Scammers will try every trick in the book to entice you to part with your money, and usually offer high returns and lucrative investment opportunities which sound too good to be true.
Our final thoughts on the calling ban
While the cold calling ban was a bold move by the government, sending a message to unscrupulous firms. While it has worked well so far as well as, it does not cover overseas companies which, in our experience, are where a big portion of bad investment advice comes from. Therefore, the rules do not cover the root of the problem, and more needs to be done from a legal perspective.
Additionally, a better job needs to be done to educate the British public on pensions in general, and the choices they have when they reach 55. Resources such as the FCA’s ScamSmart website are valuable sources of information for pension holders, but as people are still being defrauded out of their money on a regular basis, it’s clear that more needs to be done to arm people with information before they become a target for fraudsters.
If you think that you have invested in a scam pension scheme following a cold cold, get in touch. Our expert solicitors can offer support and advice with your case.