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Pension cold-calling to be banned

Pension cold-calling

High numbers of elderly people face fake investment calls, texts and emails

With high number of fake cold calls, texts and emails to elderly citizens, Britain’s elderly are facing a crisis. Every year, thousands of elderly are duped of their hard-earned money by fraudsters posing as genuine investors. In the first five months of 2017 alone, £5m was lost to fraudsters. On an average, people lost £15,000 each. There are 250 million cold calls made each year by the fraudsters. These so-called investors lure the unsuspecting elderly into investing their money in high-return investments like foreign property and wine collections. The data is alarming at an average of eight fake calls per second. Most of these calls are auto generated which means there is no genuine human interaction.

Now, the government intends to crackdown on fake cold calling. It will take a number of measures but they are not likely to be effective soon. There may be a wait up to Christmas or early 2018. Under the ban, the government intends to ban all cold calling, text and emails to pensioners. The laws will be implemented by the Information Commissioner’s Office and £500,000 fine will be imposed on those breaking the rules. However, ICO will be able to take action against companies based in Britain. Moreover, only active pension schemes with updated accounts will be able to register with HMRC. There will be exception as calls can be made to only those who have expressly requested information or are existing customers.

Read More: Financial Management on Retirement: Making Your Pension Last

The pensions minister, Guy Opperman, said:

“If people have saved for a private pension, we want to protect them. This is the biggest life’s saving 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.”

“For some people, their private pension is their biggest asset. The loss of that asset is a catastrophic situation,”

Mr Opperman said.

“The Government believes these changes will provide proper protection for hard-working pensioners who have saved all their lives and want to know we are standing up and protecting them.

“We want to ensure there is no exploitation of the vulnerable or the elderly, because there is some evidence this has happened in the past. We want it to stop.”

Nathan Long, senior pension analyst at financial advisers Hargreaves Lansdown, said the rules should limit the options for scammers.

“Clamping down on calls, texts and emails won’t stop the scammers, but it sends a loud and clear message to be on your guard if you are contacted out of the blue,”

he said.

“Making pension schemes harder to set up and ensuring transfers only proceed to appropriately regulated schemes will all help to blunt the damage that scammers can inflict moving forward. But pension savers must remain vigilant,”

he said.

Tom Selby, senior analyst at AJ Bell, said the measures would put a 'severe dent in the business models used by these fraudsters'.

He added:

'However, it is concerning there remains no set date for implementation and we urge policymakers to fast-track these vital protections through Parliament as a matter of urgency.

'It’s also important to note that this will not stop cold-calling or pension scams. Fraudsters will seek to exploit any loopholes in the rules, and many of the outfits involved will simply move their call centres abroad to avoid the ban.

'But the message this intervention sends to savers is hugely valuable and should go some way to reducing the number of people who get conned out of their life savings.

Read More: A Guide to Income Drawdown




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