The law is set to change to ban cold-callers, who try to scam people out of their pension savings, from contacting consumers without prior consent. New legislation will state that if unwanted contact is made with a consumer, firms will face fines of up to £500,000.
Almost 3,000 savers have been conned out of an average £15,000 each after fraudsters persuaded them to cash in on their pensions, by taking advantage of new pension freedoms, which were introduced in April 2015.
The new freedoms mean that anyone over the age of 55 can withdraw money from their pension pot and do whatever they want with it. This has led to many retirees investing in scams that never returned the promised income.
Although the original legal plan had only been to include telephone calls, the proposed law will now include texts and emails, which has been welcomed by many commentators.
As one analyst remarked, the fact that emails and text messages will also be covered by the ban means that savers can be absolutely certain that if someone they don’t know contacts them about their pension, they must simply not engage with them.
However, it could many months before the new rule comes in, as a spokesman for the Department of Work and Pensions (DWP) has said that the legislation will be tabled “when parliamentary time allows”.
The Government has also announced it will 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.
Under proposals to be added to the Finance Bill later this year, trustees will have to ensure that any receiving scheme is regulated by the Financial Conduct Authority (FCA), is an authorised master trust, or has an active employment link with the individual.