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HM Treasury’s Open Consultation on Pension Scams was published on 5 December 2016.
Amongst other things, it proposed that all cold-calls to consumers regarding pensions should be banned; potentially including e-mails and texts.
In their consultation response of August 2017, following widespread support of their proposal, they stated, “…The government intends to work on…the ban on cold-calling in relation to pensions during the course of this year. This will ensure that we get [the] draft legislation…right.” Somewhat ominously, that paragraph ended with (my emphasis), “The government will bring forward legislation when Parliamentary time allows.”
Nearly two years on from the initial Consultation, we are still waiting for the cold-calling ban to be introduced.
"In the meantime, consumers continue to be scammed..."
In the meantime, consumers continue to be scammed out of their pension savings. In August 2018, the Financial Conduct Authority and The Pensions Regulator launched a joint campaign concerning pension scam tactics, as figures revealed that victims of pension scammers lost an average of £91,000 each in 2017.
Hopes were prematurely raised earlier this year, following Royal Assent of the Financial Guidance and Claims Act in May 2018, (which includes the power to make secondary legislation to ban pensions cold-calling), with a flurry of headlines stating that the cold-calling ban would be “…in place by June”.
June came and went, only to be followed by an announcement that, as the government had run out of that elusive - and ‘Brexit’-dominated - Parliamentary time, the ban would be delayed until “…at least the autumn”.
Instead, we were treated to – yet another Consultation! This one sought views on the draft regulations to bring the ban into effect, with a closing date of 17 August 2018. As you would expect, we submitted a response to the Consultation, which can be read here.
In the (relatively short) Consultation, HM Treasury posed five questions, seeking agreement from respondents that the proposed regulations sufficiently achieve the aims of prohibiting unsolicited direct marketing calls in relation to pensions, whilst being sufficiently “flexible and future proofed” to prevent evolving scam methods and ‘workarounds’ from successfully circumventing the ban.
In addition, the draft regulations seek to ensure that “legitimate non-marketing pension cold-calls”, (for example, a provider attempting to locate ‘gone-aways’), are exempted from the ban and not frustrated in any way by the secondary legislation.
The two key questions that arise from this Consultation are; will the ban work, and when will it come into force?
By reference to the ‘concluding comments’ within our consultation response, the answer to the first question could be summarised as, “possibly”. Whilst the proposed ban is a welcome, albeit long overdue, step in the right direction, it only seeks to criminalise the promotion of scams, rather than the scams themselves. In addition, it is vital that, once in force, the regulations are continuously monitored, to ensure that they remain ‘fit for purpose’.
And if the ban is to stand any chance of succeeding, its introduction will need to be supported by a properly funded awareness campaign, via television, newspapers and radio, as well as in public spaces such as supermarkets and doctors’ surgeries. And please – this time round – don’t patronise the intended audience by using a multi-coloured furry character called “Banny”!
The answer to the second question is, however, more difficult to provide, as its implementation rests with Parliament - and with EU bureaucrats.
Once HM Treasury have provided their response to the consultation, they state that, “Subject to Parliamentary timetabling, we…intend to lay the regulations in autumn 2018”. That will not be the end of the matter, as the secondary legislation will need to be debated within both houses of Parliament, and an effective date for its introduction subsequently agreed.
This will all take time, and with the ‘Brexit’ negotiations now reaching their most important stage, time is the one thing that politicians do not have in abundance. Despite Treasury assurances that they, “…are committed to introducing a ban on pensions cold-calling as quickly as possible”, there is an ever-increasing prospect that the ban could be delayed until after Britain’s intended date of leaving the EU on 29 March 2019.
The financial implications of unnecessarily delaying the ban any longer, whilst politicians argue amongst themselves about the type of Brexit deal that should prevail, will not endear them to those who are conned out of their life savings by scammers who must be relishing the time that it is taking to bring the ban into effect.
In essence, our consultation response could have been limited to four simple words;