URGENT CALL TO END PENSIONS RIP-OFF
URGENT action is needed to ban cold callers selling pension products in order to stop thousands of older people being conned out of their retirement savings, MPs have demanded.
The Work and Pensions Select Committee said the Government must take “urgent legislative action” to put a ban on cold callers in place by June next year.
Pensioners are believed to be at an increased risk of being scammed by conmen, who are keen to target their nest eggs. Almost 11 million pensioners are hit by cold callers a year.
Official figures show 250 million scam calls are made every year, which is equivalent to eight every second.
Rules already prohibit cold calls on selling mortgages, which the committee wants extended to pensions.
Companies flouting the ban could face fines of up to £500,000.
Committee chairman Frank Field said pensions are “rich pickings” for scammers offering over-the-top returns or seemingly clever advice.
He said: “Every day that passes without a ban, people are being avoidably conned out of their life savings.
“There is no need to overcomplicate this. Our proposal would see an enforceable ban in place by summer, closing at least one door on rafts of scammers at a stroke.”
The committee also said people should be given guidance before they access their pension pot, unless they expressly opt out. Labour’s Mr Field added: “Making guidance the default option combined with the ban on cold calling would be a simple but big step forward in consumer protection in the era of pension freedoms.”
The MPs said the risks of being conned have been heightened since the 2015 pension freedoms, which gave over-55s a wider range of choices over how they use their pension pot.
The scale of scamming is likely to be grossly underestimated by official reports, the committee warned, and the problem of people being pushed towards “completely legal but totally inappropriate” investments which fall short of fraud needs to be tackled.
They have included overseas property developments, forestry and film.
A Treasury spokeswoman said: “We take the threat of pension scams very seriously and we are already protecting savers. We are bringing forward legislation to ban pensions cold calling, tightening HM Revenue and Customs rules to stop pensions scammers and fraudulent schemes, and preventing the transfer of money from occupational pension schemes into fraudulent ones.”
Yvonne Braun, at the Association of British Insurers, said: “With mortgages protected by a cold calling ban it is high time pensions were given the same level of protection.”
She said savers should seek free, impartial guidance from Pension Wise and the Pensions Advisory Service or from regulated financial advisers.