Pensions cold calling ban must be brought forward, urge MPs

The Work and Pensions Select Committee says the Government needs to introduce new legislation by next summer to help prevent pensioners losing their life savings

Nearly £5m was obtained by scammers targeting private pensions in the first five months of 2017 (iStock)

The Government is being urged to bring forward legislation to ban cold-calling, protecting elderly people from being scammed out of their pension savings.

The Government last year committed to introducing a ban on cold-calling, but such legislation is unlikely to come into effect until 2020 because it would be tied to the establishment of a new financial guidance body.

On Monday, the Work and Pensions Select Committee said the Government needs to act now, and that the ban needs to be in place by June at the latest, to clamp down on an escalating problem. It also said that savers should automatically be offered guidance when accessing pension pots.

Pension freedoms were introduced in April 2015. They allow anyone over the age of 55 to take some or all of their pension as a lump sum, with the first 25 per cent paid tax-free.

The committee said that the high financial value of some pension pots, combined with some pensioners’ low awareness of the risks involved in investing had made pensions a scammer’s “perfect storm”.

“Every day that passes without a ban, people are being avoidably conned out of their life savings,” said Labour MP Frank Field, chair of the committee.

“There is no need to overcomplicate this: our proposal would see an enforceable ban in place by summer, closing at least one door on rafts of scammers at a stroke.”

Official figures show nearly £5m was obtained by scammers targeting private pensions in the first five months of this year. The Government also estimates that £43m had been unlawfully obtained since April 2014, with fraudsters taking on average £15,000 per person.

Victims have been tricked into investing in diamonds, overseas property, storage containers, forestry and film, the committee said.

It warned that the scale of the problem was likely to be grossly underestimated by official reports and may not be apparent for many years.

The Government’s plans to ban cold-calling were initially announced in last year’s Autumn Statement.

Mr Field said pensions made rich pickings for scammers offering “fantastical returns or seemingly clever advice”.

“Making guidance the default option combined with the ban on cold-calling would be a simple but big step forward in consumer protection in the era of pension freedoms,” he added.