Call for Consumer Protection
The Work and Pensions Select Committee is calling on the Government to urgently improve protection for people’s pensions. This is absolutely right.
Too many people are losing their pensions as a result of fraudulent cold-callers who entice them to transfer their hard-earned savings into scam schemes.
The Committee is calling for a proper ban on cold-calls to be introduced urgently in the Financial Guidance and Claims Bill which is going through Parliament at the moment. It is also calling for everyone to be automatically offered an appointment with the Government’s free financial guidance service before they transfer money out of their pension. These measures would significantly improve consumer protection.
Thanks to the hard work of the House of Lords, the Government was defeated, by a cross-party group of Peers, and forced to include measures which the Work and Pensions Select Committee is calling for. Members from all sides of the House joined together to add these important amendments to the Bill. Requirements to ban cold-calling and to ensure everyone automatically receives free help to discuss their pension before deciding to transfer have been added. Now the House of Commons can build on them to strengthen the legislation even further.
All customers wishing to transfer or withdraw pension savings need to be ‘automatically-enrolled’ into free financial guidance, unless they have an IFA. The free PensionWise service has satisfaction rates around 90% but uptake is woefully low – less than 10% have a guidance session.
Ensuring everyone is auto-enrolled into guidance should help them make better-informed decisions and protect more people against scams. It can also help them understand the tax advantages of keeping money in their pensions for longer, to avoid losing some of the savings unnecessarily.
Most scams originate from a cold-call and banning cold calling is really important. The Government has already said it wants to do this but it must act urgently and also implement a ban in the most effective manner.
Making the FCA responsible for banning both cold-calling and also the use of leads obtained from unsolicited approaches would best protect people. FCA implementation could strip firms of their licence if they benefit from cold-calling, thereby undermining the business models of cold-callers most effectively. Cold-calling for mortgages was banned long ago, now we must do this for pensions too.
We must give the public a clear message – if anyone contacts you out of the blue about your pension, they are breaking the law. If you get an unsolicited phone call, just hang up. If you get a text, just delete it. Currently, the public do not realise the dangers of someone offering them a ‘free pension review’ or an exciting new pension investment scheme with great returns.
The sooner these measures are passed and implemented, the safer our pensions will be.