01:01, December 11 381 0 theguardian.com

2017-12-11 01:01:03
Protect savers from cold-call pension fraud by law, MPs urge

An influential parliamentary committee has called on the government to fast-forward legislation that would halt the use of cold-calling by scammers who target people’s retirement pension pots.

In its latest report on pension freedoms, published on Monday, the work and pensions select committee says the government needs to change legislative tack to swiftly outlaw unsolicited pensions sales calls.

Pensions freedoms introduced in 2015 allowed individuals to move the pension pot that they had accrued during their careers for the first time. While mostly welcomed by those nearing retirement age, the change also allowed unscrupulous financial advisers to con the unwary out of their money.

Almost £5m was lost to fraudsters in the first five months of 2017, and the government has estimated that since April 2014, a total of £43m had been taken, although these figures are thought to grossly underestimate the problem. Victims have been persuaded to invest their pension savings in diamond mines, forestry and overseas property. In many cases, the sums lost have exceeded £250,000.

Following a consultation, the government has repeatedly said that a ban on pension cold-calling needs to be in place. However, delays to the legislation and arguments about the best way forward mean it is unlikely to come into effect before 2020, say experts.

Frank Field, Labour MP who chairs the committee, said: “Every day that passes without a ban, people are being avoidably conned out of their life savings. There is no need to overcomplicate this; our proposal would see an enforceable ban in place by summer, closing at least one door on rafts of scammers at a stroke.”

He said that pensions make rich pickings for scammers who offer fantastical returns or seemingly clever advice.

“The strongest weapon in the armoury against this is good advice and guidance – people just aren’t taking it. Making guidance the default option, combined with the ban on cold-calling, would be a simple but big step forward in consumer protection in the era of pension freedoms. The government should use the bill [the financial guidance and claims bill] that has just arrived in the Commons to legislate to protect pensions now.”

The Treasury said: “We take the threat of pension scams very seriously and we’re already protecting savers.” But it warned that the amendment proposed by Field and his committee may be unworkable as it could be “outside the scope of the bill”.

Tom McPhail, pensions expert at investment company Hargreaves Lansdown, said there is widespread support across the pensions industry for the government to do more to help protect investors.

“It is important any interventions are carefully thought through. The ban would have to be policed and would have to avoid interfering with legitimate business activity; guidance at retirement is useful for many but it is questionable this can be delivered effectively,” he said.

The Association of British Insurers said pensioners needed to be given the same protection from cold-calling that those buying mortgages already enjoy.

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