The industry has welcomed Government measures against pension cold calling set out yesterday but has criticised the timetable for implementation, which former minister Steve Webb says could take until 2020.
Yesterday the Government confirmed it will legislate for a ban on cold calling in relation to pensions, including emails and text messages, as well as a tightening of HMRC rules to stop scammers opening fraudulent pension schemes and tougher actions to help prevent the transfer of money from occupational pension schemes into fraudulent ones.
The cold calling ban will be enforced by the Information Commissioner’s Office (ICO).
In future only active companies producing regular accounts will be able to set up small self-administered schemes (SSASs).
Trustees will in future also be required to check a scheme receiving a transfer is regulated by the Financial Conduct Authority, or has an active employment link with the individual, or is an authorised master trust.
The announcement comes as the Government published figures showing almost £5m was obtained by pension scammers in the first five months of 2017. It estimates that £43m has also been unlawfully obtained by scammers since April 2014, with those targeted having lost an average of £15,000, as scammers try to encourage savers to part with their money with false promises of low-risk, high-return investment opportunities.
But the Pensions and Lifetime Savings Association and Royal London director of policy Steve Webb have both attacked the timescale proposed by the Government for the introduction of the measures. The consultation says only that the government will be working on the details for the rest of this year and will then legislate ‘when Parliamentary time allows’. Webb says this could mean it is 2019 or 2020 before the measures become law.
Minister for pensions and financial inclusion Guy Opperman (pictured above) says: “Today’s figures highlight the extent to which people’s savings are being targeted and stolen through elaborate hoaxes – leaving them with little opportunity to build up their savings again. That is why we are introducing tough new measures for those who scam.
If people have saved for a private pension, we want to protect them. This is the biggest lifesaving that individuals normally make over many years of hard work. By tackling these scammers, people should know that cold calling, apart from exceptional circumstances, is banned.
Economic secretary to the Treasury Stephen Barclay says: “It’s utterly unacceptable that people who have worked all their lives to build up a pension pot should be subject to scams which may leave them out of pocket.
“Pensions are often the most valuable asset a person has upon reaching retirement – and that’s why we are determined to crack down on scammers and protect our hardworking savers.”
PLSA policy lead, engagement, EU and regulation James Walsh says: “While this is a step in the right direction, there is much more the Government could do to protect savers from pension scams sooner rather than later. People are at risk of losing their pension savings to scammers and we need a clear timetable from Government on when it will implement key elements of its proposals. We need more urgency.
“The cold calling ban which covers all forms of electronic communication is welcome, but we are concerned that the required ‘employment link’ will simply be abused by scammers setting up all manner of fake employment relationships. The legislation later this year to ensure that only active companies can register a new scheme looks like a positive step, but – again – it will need careful implementation to ensure scammers cannot abuse it.
“We are pleased to see the Government recognises the attraction of the more ambitious authorisation regime that the PLSA has proposed. We still think the Government should be pursuing this now, rather than waiting to see how the master trust regime fares once it is introduced in 2019.”
Webb says: “The fact that the government is planning to take action on cold-calling and on pension scams is very welcome, but the proposed timetable is worrying. With people being scammed every day, this is much too slow. Even if a measure is included in an Act of Parliament some time in 2018, there will then need to be more detailed ‘secondary’ legislation drafted and debated. Unless the government makes this a priority we could still see cold-calling well into 2019 or 2020.”