Outlawing unsolicited calls or emails about pensions will fail to stop scammers who have stolen increasingly large amounts of cash from unsuspecting savers, experts have warned.
Following months of pressure – and a high-profile campaign led by the Telegraph – the Government confirmed it would introduce a ban on cold calls in a bid to stem the flow of pension money into the hands of fraudsters.
Plans have been delayed twice. First by the snap election in June 2017 and then, according to reports, because a ban would have entailed too great a rewriting of the Financial Guidance and Claims Bill.
Now the Government has said a ban will be in place by June, following a last-minute amendment to the Bill. However, pension firms warn the measures will not go far enough and called for "further interventions" to protect savers.
Tom Selby, of AJ Bell, a personal pension firm, said the ban "sends a clear message to people that if they receive a cold call about their pension, they should simply hang up the phone."
"However, the reality is scammers are becoming increasingly sophisticated and in the time it has taken policymakers to introduce this ban, tactics have evolved. We have always said a cold-calling ban should be viewed as the beginning of the onslaught on pension scammers, and we urge the Government and regulators to consider further interventions to protect savers."Mr Selby called on policymakers to create a "permitted list" of safe pension schemes so legitimate providers could release cash only to pre-approved funds.
It is thought around 250 million cold calls are made in Britain every year. Research from the City watchdog estimated that 107,000 responded to an approach in 2017, putting themselves at risk of being scammed.
Official figures from last year revealed fraudsters had successfully conned people out of £43m in the past three years, with the average victim losing £15,000. The "pension freedom" reforms, introduced in 2015, have been used as a selling tool by criminals. The new rules let savers spend their pensions however they like.
Most pension scams involve fraudsters convincing savers to transfer money from legitimate arrangements to their own investment funds. In some cases the money ends up in highly-risky offshore investments; in others it simply disappears.
Savers have a legal right to move their money, which has made it difficult for the pension industry to stop transfers to suspect schemes.
Experts say the ban will help raise awareness that an unsolicited call is illegal but is unlikely to stop firms – many of which operate overseas call centres – from bombarding pensioners.
Kate Smith, of Aegon, a pension company, said: "Pension scams have been a menace for years. At last the Government has taken some action to tackle pensions fraud that has brought misery to thousands and cost people tens of millions of pounds every year."
She added: "For now the battle has been won, but it would be premature to celebrate until pension scamming is stamped out completely. The best way to do this is to give pension schemes powers to block suspicious transfers, so hard earned pensions aren’t moved to pension scam vehicles in the first place. This would stop a lot of heartache."