Financial Planning

Pension Cold Calling is Finally Illegal

Pension Cold Calling is Finally Illegal

Some positive news has arrived in time for the new year. From 9th January 2019, any pensioner who receives a cold all about their retirement savings can finally be armed with the knowledge that such activity is now against the law.

This new law not only covers receiving cold calls but also extends to the sending of unsolicited emails and text messages. Moreover, if a company violates the new rules then they could receive fines of up to £500,000.

The new rules are long overdue, with the government repeatedly delaying the decision last year – costing pensioners an average of over £90,000 in fraud due to scam cold calling. Collectively, this amounted to nearly £24m in 2018, which is a £9m increase in 2017.

Indeed, some estimates of the total number of fraudulent calls in 2018 went as high as 250 million total calls (480 per minute). Since these figures are largely based on reported cases of fraud, however, the total number of fraudulent calls and also lost retirement savings is likely to be far higher.

So it’s great news that there are new rules coming into force which aim to squash this practice and safeguard people’s retirement savings. However, we at Cedar House believe you should still be vigilant and follow some important tips here to better protect yourself.


Domestic & Overseas threats

Whilst it’s worth bearing in mind that many companies making these kinds of calls are based in the UK, a sizeable number of these calls originate from abroad. Sometimes these are from registered businesses in their home countries, whilst many will be unregistered people looking to scam you out of your retirement savings.

It’s worth spelling out that whilst the new cold calling ban might go some way to reducing the number of fraudulent calls from within the UK, it is unlikely to prevent such calls which come from overseas. Businesses can always put themselves into administration in order to side-step fines, and overseas companies might be beyond the enforcement reach of UK law. Remember as well that some malicious companies are based in the UK, but they employ call centres from overseas in order to distance themselves from repercussions if their activities are uncovered.

You, therefore, must be incredibly wary of any company contacting you out of the blue about your pension, especially if you have never heard of them before. Remember as well that within the UK, you do have some financial protection if you transfer money to a UK-registered business. There are certain legal mechanisms there which might make it possible to get some of your money back, although this is not guaranteed. However, if you transfer money from your pension to outside the UK to an overseas business then you might never see your money again if things go wrong.


Face-to-face threats

You also need to be aware that whilst the new ban rightly addresses unsolicited emails, texts and phone calls from scammers, it does not close off another sinister channel of fraud – that is, face-to-face encounters with fraudsters.

If you look at the British Steel pension fraud incident, for example, the government enquiry into this case found instances where pensions scheme members were approached in person by people claiming to work on behalf of financial advisers (a practice known as “factory gating”).

Be wary, then, of anyone who approaches you in person as well. Make sure they actually work for the company they claim to represent. You can do this by emailing or telephoning the company directly after speaking with this person and gathering the appropriate references.

Make sure their company is registered by the Financial Conduct Authority, and that it has a reliable record of positive and authentic client reviews and testimonials. Do not merely rely on information about the person gleaned from the internet, such as the person’s social media profiles (which are easy to embellish and/or fake).


General tips for financial protection

Beyond some of the guidance we’ve provided above, you should also watch out for any person or company claiming to offer low-risk investments which deliver a guaranteed (or near-guaranteed) financial return. Such genuine investments rarely if ever exist, as investing always carries an element of risk. So be very careful not to transfer your pension due to the allures offered by a fake scheme.

When the subject of conversation specifically turns to transferring your pension (with someone claiming to offer a higher return on your investment) be especially careful. There are many decent, legitimate businesses out there which can offer valuable, regulated advice on whether a transfer might be right for you. Unfortunately, however, the area of pension transfers is also where scammers like to strike due to the often vast amounts of money involved.

Be very careful to never give away any sensitive, personal or financial information away to someone over the phone. You might even want to consider registering with the Telephone Preference Service in order to try and reduce the number of unsolicited calls which actually come through to your line. Be on your guard if anyone calls you out of the blue about an “unmissable” investment opportunity, or who claims to be able to give you early access to your pension money.

With regards to emails, you might receive from an unknown person or company about your pension, be very careful to not click on any links in the message. Sometimes these links are disguised as authentic links to a legitimate business website, but in fact, take you to a malicious one instead. Rather, type the web address yourself into your browser.


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