A forthcoming ban on cold-callers who try to scam people out of their pension savings will include emails and texts, the government has announced.
Almost £5m was lost to fraudsters in the first five months of 2017, said the government, and it was estimated that since April 2014 a total of £43m had been taken.
Companies that do not have prior permission to contact consumers, or do not have an existing client relationship with them, will face fines of up to £500,000 from the Information Commissioners Office (ICO).
The ICO can only take action against companies based in Britain. There will be two exemptions to ensure legitimate calls are not affected – companies will still be able to contact consumers who have expressly requested information from them, and will still be allowed to make marketing calls to existing clients.
But whereas the government originally proposed excluding texts and emails, it has now decided to include them within the new law.
A spokesman for the Department of Work and Pensions (DWP) said the legislation would be tabled “when parliamentary time allows”, raising the possibility that it could be many months before the rules come in.
The pensions minister, Guy Opperman, said:
“If people have saved for a private pension, we want to protect them. This is the biggest life’s saving that individuals normally make over many years of hard work. By tackling these scammers, people should know that cold calling, apart from exceptional circumstances, is banned.”
Some fraudsters have taken advantage of the new pension freedoms, which were introduced in April 2015.
Since then, anyone over the age of 55 has been allowed to withdraw money from their pension, with the ability to spend it, or invest it elsewhere.
The government will also tighten the rules to make it harder for consumers to transfer money to unregulated pension schemes, such as those investing in forest schemes or parking spaces.
The new measures have been welcomed by the Pensions Regulator, and by the former pensions minister, Ros Altmann.
“The sooner the government acts, the sooner we can improve protection for people’s pensions.
“We will never stop such fraudsters completely, but these measures will certainly protect the public better – about time too,”
However, experts warned that fraudsters would try to find new ways of working.
“It’s important to note that this will not stop cold-calling or pension scams,” said Tom Selby.
“Fraudsters will seek to exploit any loopholes in the rules, and many of the outfits involved will simply move their call centres abroad to avoid the ban.”
While the rules on registration will form part of the finance bill, the cold-calling ban will need separate parliamentary time, so it is unclear when it will come into effect.