The call came from the Work and Pensions select committee’s report ‘Protecting Pensions against Scams’.
The report, which assessed the measures contained in the Financial Guidance and Claims bill, also called for default measures to protect pensioners from making transfers without receiving guidance.
The bill aims to bring in extra protection for pensioners in the wake of pension freedoms. Introduced by chancellor George Osborne in the 2014 Budget, pensioners are now able to withdraw, spend or re-invest their pension pots as they see fit.
Scams “grossly underestimated”
However, according to the select committee report published Monday, scamming in the wake of the freedom reforms is “likely to be grossly underestimated by official reports and its full scale may not be apparent for many years” and “warrants urgent action”.
MPs said the ban on cold calling is flawed because it is tied to the creation of a new financial guidance body – potentially delaying it until 2020.
“It is much more urgent than that,” said MPs. “We recommend a new clause which would require the government to introduce a ban by June 2018 at the latest, but would enable it to set the details by regulations.
“Every day that passes without it, people are being avoidably conned out of their life savings.”
The report also calls for the ban to be “future proof: capable of being adapted as scams evolve”.
Default guidance
The second part of the report deals with default guidance.
According to the committee: “Far too many people are currently taking vital decisions in the dark.”
The report says too few people are using the Pension Wise service, which pension firms are not motivated to advertise.
While welcoming the bill’s intention to lift engagement, the committee argued for it to go further and require individuals to “participate or expressly turn down [guidance] before being granted access to their pension pot”.
Committee MPs would like to see details of what constitutes a choice of not receiving guidance to be set out in Financial Conduct Authority rules, following a public consultation.
They would also like to see details of appropriate exemptions in instances where: the pot concerned is of low value; the individual has already received guidance or advice; or the transfer in question is a routine consolidation of pots.
