UK: UK Government Will Speed Up Introduction Of Pension Cold Calling Ban

Last Updated: 23 February 2018
Article by Ben Fairhead and Stephen Scholefield

Originally published by Out-Law.com

The UK government will speed up the introduction of its planned ban on 'cold calls' relating to pensions, it has announced.

The ban will be introduced through a "workable amendment" to the Financial Guidance and Claims Bill, which is currently before parliament, and then brought into force using regulations, according to the government. It also intends to take action to further boost uptake of pensions guidance through the government-backed Pension Wise service.

The government announced its intention to ban pensions cold calling in August 2017 after a consultation which found strong support for the measure, but did not indicate when it would introduce the ban. The new commitment comes in response to a report by the House of Commons Work and Pensions Committee, which called on the government to take "urgent legislative action" through the existing legislation.

Pension scams expert Ben Fairhead of Pinsent Masons, the law firm behind Out-Law.com, welcomed the new commitment, although he noted that the form and timing of the government's plans remained "vague". The government previously rejected the text of a new 'clause 4' to the bill, inserted by members of the House of Lords, as "flawed".

"It looks like the select committee has actually struck a chord with its proposed amendment to the Financial Guidance and Claims Bill, and the government is inching a bit closer towards the cold calling ban," he said. "However, the government is evidently not accepting the amendment as drafted and will bring forward its own amendment. This is promising but vague – it remains impossible to say precisely when a ban might actually take effect."

"The government response comes, incidentally, pretty much five years to the day since the Pensions Regulator launched its 2013 Valentine's Day scorpion campaign alerting the public to pension scams. Cold calling was rife even then. This just highlights how slowly the legislative wheels have turned in tackling pension scams," he said.

The planned ban, as announced last year, would cover unsolicited calls, emails and text messages about pensions, and be enforced by the Information Commissioner's Office (ICO). There would be exclusions for legitimate businesses, including in cases where an existing client relationship exists.

In its December report, the Work and Pensions Committee urged the government to legislate for an enforceable ban on cold calling by June 2018 at the latest. The government has now said that it agrees with the committee's aim of "finding an alternative, quicker way to ban pensions cold calling", but will bring forward its own amendment with which to do so.

"It is important to address the risk of scammers attempting to challenge or circumvent a ban and to ensure that the ban is workable, robust and less liable to legal challenge in the future," it said, of its plans for this amendment.

The government has also accepted the committee's recommendations around pensions guidance. Its proposals "closely align with ... and improve upon" the committee's recommendations, which were based on requiring saver to either access guidance or expressly refuse to do so before they could access a pension pot.

Pensions expert Stephen Scholefield of Pinsent Masons said that the government had "reaffirmed its commitment to ensuring that more people access pensions guidance".

"This grows in importance as more pensions savings are held in money purchase arrangements, where savers have to make individual decisions and can 'cash out' under the pension freedom reforms," he said.

"Interestingly, the government suggests that some decisions that people make may be driven by a belief that the ability to cash out may not be permanent. This is a worrying thought, but perhaps not surprising after years of tinkering with the pensions system," he said.

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