Having scrapped the original legislation because of the snap general election, the government has announced plans to ban cold calling on pensions have been revived and extended to unsolicited emails and texts.
The Information Commissioner’s Office will enforce the ban on UK-based companies with potential fines of up to £500,000 ($644,290, €546,991) as one element of a broader crackdown.
This includes restricting the setting up of small self-administered schemes (SSAS) within dormant businesses with up to date accounts under the responsibility of the HM Revenue & Customs.
The measure will be introduced relatively swiftly in this year’s second finance bill – a bill that was also necessitated by the snap election.
The government is also going to require pension trustees to check the legitimacy of receiving schemes, which should help providers and schemes block transfers to suspicious operations.
The work will be led by the Department for Work and Pensions (DWP) and will need to be coordinated with secondary legislation relating to the Pensions Schemes Act. This act largely concerns the regulation and authorisation of master trusts, but doesn’t come fully into force until 2019.
Timetable concerns
The industry remains concerned about the timetable given the likely legislative logjam owing to Brexit.
James Walsh, policy lead for regulation at the Pensions and Lifetime Savings Association (PLSA), says: “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.”
Darren Cooke, director of Red Circle Financial Planning, who last year organised the parliamentary petition calling for ban, has also taken to social media to suggest the industry needs to hold the government’s feet to the fire on the timetable.
He has been backed by the likes of Royal London’s director of policy and former pension minister Steve Webb.
The case for a rapid introduction is also underlined by the government’s own figures which suggest that since April 2014 some £43m has been lost to pension scammers including £5m in the year-to-date amid industry concerns these represent only reported losses.
On the plus side, the government has already held a consultation on the issue which closed in February this year and the Treasury published its response on Monday this week.
It contains the following passage on the timetable: “The government intends to work on the final and complex details of the ban on cold calling in relation to pensions during the course of this year.
“This will ensure that we get draft legislation to ban cold calling in relation to pensions right. The government will bring forward legislation when Parliamentary time allows.”
Some providers, while welcoming the measure to prevent SSAS’s being launched by dormant businesses, say that HMRC should also look at SSASs that already exist.
Kate Smith, head of pension at Aegon said: “HMRC must, as a matter of urgency, carry out an audit of all existing registered schemes, identifying those set up by dormant companies, which run a high risk of being fraudulent and strike these off.
“Scammers must be left in no doubt that pension fraud will not be tolerated.”
The consultation response does, at least, allow advisers to put some flesh on the bones of the announcement.
It incorporates some industry responses into the plan – at least where the government agrees with them – and work by Project Bloom, the taskforce consisting of civil servants, regulators and law enforcement agencies, set up to monitor and frustrate scammers.
