We discuss the government’s ban on pension cold-calling and if it will actually be effective in preventing scams.
The pension cold-calling ban
After it was revealed that the average pension scam costs the victim £91,000, it was clear that swift action was necessary to protect consumers.
The Government’s long-awaited ban on pension cold-calling came into force in January 2019. As a result, unsolicited calls to individuals regarding their pensions is now illegal.
Ignoring the ban carries heavy fines. Cold-callers may find themselves with a fine of £500,000 as a result of breaking the law.
The ban covers all companies under UK jurisdiction. This includes firms that operate within the UK.
Will it work?
While the legislation will deter some, it is not a solution to the wider problem. Those who undertake illegal activity are already willing to ignore the law.
However, it will add more accountability to companies working with third-party introducers. Those who directly profit from immoral cold-calling businesses have the block in place and fines are substantial enough to put them off.
One key positive of the ban is that it has raised awareness for the issue. As a result of the discussion surrounding the topic, more people know that pension cold-calling is illegal.
Instead of changing the way they operate, firms will simply change their location. Moving operations overseas will allow them to get around the ban as they will no longer be under UK jurisdiction.
What to do
We believe that to ensure the legislation is successful, a wider campaign should be rolled out to educate the public.
People need to know that if they receive a pension cold-call, they should either note down the phone number and report it to the Information Commissioner’s Office (ICO) or just hang up.
Did you invest in a pension scheme following a cold call? Get in touch with our team to discuss financial mis-selling.