Why is the government banning cold-calls about pensions?

It’s not just because they’re a nuisance

The UK government is getting ready to BAN the practice of cold-calling in an effort to curb the huge increase in mis-sold and fraudulent pension schemes and transfers.

While not all mis-sold pensions involve a cold-call from a marketing company, many do, as high-risk pension arrangements such as SIPPs with non-standard or unregulated investments, get pushed upon retail clients – ordinary people who can’t afford to take such risks with their retirement funds, and don’t have an understanding of what they’re doing.

While the financial services industry has generally welcomed the news, there are those that are sceptical that the ban will have the desired effect.

Phoning it in

The ban, which does not yet have a date for implementation, should put a few obstacles in the way of existing so-called “boiler-room” scams operating from inside the UK, but as pointed out several times by several industry critics, there’s little the stop operations out-souring their cold-calling requirements to outside of the UK.

We’ve all received calls from call-centres based anywhere from Spain to India, and if the purpose of these calls is to simply gain the specific opt-in from the prospective client in order for the UK marketing company to call them, and pitch their pension review or transfer, they cycle of mis-sold pensions may continue.

Enforcing the ban

Responsibility for enforcing the ban will fall on the shoulders of the ICO – the Information Commissioner’s Office, and more than anything sends out a message to the general public about cold-callers ringing about pensions in the future!

In terms of our own campaign to end pension mis-selling, we welcome the sentiment: scammers and mis-sellers need to be stopped, but we’d also ask a question:

Would making an IFA accepting a cold-called lead a regulated activity, and IFA’s & SIPP companies responsible for the sales tactics and behaviours of marketing companies not be a more effective end to pension mis-selling?