What the consultation response tells us
The definition of pension scam has been adjusted slightly removing specific reference to age 55 and replacing it with a reference to the normal minimum pension age. This leaves the following definition.
“The marketing of products and arrangements and successful or unsuccessful attempts by a party (the “scammer”) to:
• release funds from an HMRC-registered pension scheme, often resulting in a tax charge that is not anticipated by the member
• persuade individuals over the normal minimum pension age to flexibly access their pension savings in order to invest in inappropriate investments
• persuade individuals to transfer their pension savings in order to invest in inappropriate investments where the scammer has misled the individual about the nature of, or risks attached to, the purported investment(s), or their appropriateness for that individual investor.”
Types of approaches now considered illegitimate
The consultation also lists the types of scamming approaches noted by the Project Bloom team including offers of:
• a ‘free pension review’, or other free financial advice or guidance
• assessments of the performance of the individual’s current pension funds
• inducements to hold certain investments within a pensions tax wrapper including overseas investments
• promotions of retirement income products such as drawdown and annuity products
• inducements to release pension funds early
• inducements to release funds from a pension and transfer them into a bank account
• inducements to transfer a pension fund
• introductions to a firm dealing in pensions investments
• offers to assess charges on the pension
Following the consultation, it will also include ‘offers to trace lost pension pots’ and ‘offers to consolidate pension pots’. Some advisers had suggested that calls about performance assessments should be excluded, but that has been rejected.
The paper does set out two exemptions from the proposed ban – calls where consumers have expressly requested information from a firm and calls where an existing client relationship exists. These exemptions will also apply to emails and texts.
The government says it is alive to the possibility that scammers will try to use these exemptions to work around the legislation and will take this into account in drafting the legislation.
