Out-Law News | 21 Dec 2018 | 2:48 pm | 1 min. read
The Privacy and Electronic Communications (Amendment) (No. 2) Regulations give effect to a ban first announced by the government in August 2017. The ban covers unsolicited calls, emails and text messages about pensions. It will be enforced by the Information Commissioner's Office (ICO), which has the power to issue fines of up to £500,000 for breaches.
"This has taken a long while, but finally means that cold calls in relation to pensions will be officially banned come early in the New Year," said pension scams expert Ben Fairhead of Pinsent Masons, the law firm behind Out-Law.com. "It remains debatable how effective the ban will be in deterring scammers, but it might well deter more individuals from transferring their pension funds into scams when they are told the cold calls they have received were illegal."
"Technically, a member still wishing to proceed with a transfer originating from a cold call might have a statutory right to do so although this is something that could be squared off if the statutory right test comes up for some legislative change in 2019, as was suggested by the government's consultation on pension scams. Pending that, we might well see an emboldened approach anyway from trustees and providers in declining transfers when they expressly become aware of the existence of a cold call although, if in doubt, it would be sensible to take some advice if such a situation arises," he said.
Current legislation gives pension schemes limited scope to refuse a statutory transfer request to a scheme which looks like a scam. In 2017, the government said it would legislate to limit the statutory right to transfer to certain types of pension schemes: those operated by companies authorised by the Financial Conduct Authority (FCA); authorised master trust schemes; and schemes where the person requesting the transfer could provide evidence of a 'genuine employment link' with a receiving occupational pension scheme.
The government said at the time that it would not make the change until the new authorisation regime for master trusts was fully in force. These multi-employer schemes have until 31 March 2019 either to demonstrate that they meet certain criteria and apply for authorisation from The Pensions Regulator, or exit from the market.
The number of people seeking information about pension scams via the 'ScamSmart' website rose five-fold following the launch this summer of a joint awareness-raising campaign by the regulators, the FCA and The Pensions Regulator. This campaign urges pension savers to be wary about unsolicited 'too good to be true' pension review offers, and to check who they are dealing with before reinvesting their savings.
Pension scam victims lost an average of £91,000 each to fraudsters last year, according to the regulators.