The ban on pensions cold calling is now in place

After much consultation by the Government, the ban on pensions cold calling is now in place.

On 19 December 2018, Parliament approved the Privacy and Electronic Communications (Amendment) (No.2) Regulations 2018. Thereby placing a ban on pensions cold calling with effect from 9 January 2019.1

The legislation prohibits cold calling in relation to occupational pension schemes or personal pension schemes unless:

  • the caller is authorised by the Financial Conduct Authority; or
  • is the trustee or manager of an occupational or personal pension scheme.

Also, the recipient of the call must:

  • consent to such calls from the caller on that line; or
  • have an existing client relationship with the caller and might expect to receive pensions cold calls; and
  • have a simple means of refusing the use of their contact details for such calls.

The ban also covers the sending of unsolicited texts and emails.2 The legislation allows for the Information Commissioner’s Office (‘ICO’) to issue civil monetary penalties of up to £500,000 for breaches of the regulations.

How bad is the problem?

Pension scams represent a serious risk to individuals with pension savings. In fact:

  • the Financial Conduct Authority reported that victims of pension scammers lost an average of £91,000 each in 2017;3
  • research suggests that there could be as many as eight scam calls every second, that's 250 million calls per year;4
  • Citizens Advice has calculated that 10.9 million consumers have received unsolicited contact about their pension since April 2015.4

Concerns also exist over the number of Defined Contribution (DC) scheme transfers. The Government reports that there were 30,000 DC scheme transfers in 2015/16, representing £1bn of assets. Industry estimates suggest that fraudsters could be behind as many as 1 in 10 pension transfer requests.4

More recently, The Pensions Regulator (TPR) announced that the police questioned six people about a suspected fraud operation. Whereby around 370 people are believed to have transferred around £18m into eight pension schemes. TPR opened a case after a number of legitimate schemes received requests from members to transfer their savings into suspicious schemes, and reported it to the TPR.5

What to do if you receive a pension cold call

Given the nature of these calls, and the people and organisations making them, application of the ban will rely on such instances being reported by the individuals receiving them.

Advice from the Government is as follows:

“If you receive a cold call about your pension, get any information you can, such as the company name or phone number, and report it to the Information Commissioner’s Office via their website or on 0303 123 1113.

If you think you have lost money to fraud, report it to Action Fraud on 0300 123 2040 or via their website.”

What can employers do about pension scams?

The more that people are aware of the risk of pensions scams and cold calling, the better equipped they will be to deal with it. Whilst the ban on cold calling makes it illegal, it may not actually prevent them from taking place. But, informed individuals will know that calling them out of the blue is against the law and so they should not be trusted.

More employers are recognising that staff who suffer from financial scams are likely to experience stress and have time off work. So providing help to staff, via presentations and communications, to help them identify and deal with pension cold calls and scams, is beneficial to the business as well as the individual.

1 GOV.uk pensions cold calling banned 
2 cipp.org.uk 
3 fca.org.uk 
4 GOV.uk pensions scams consultation
5  The Pensions Regulator