The committee said the government should take “urgent legislative action” through the Financial Guidance and Claims Bill to put an enforceable ban on cold calling in place by June 2018 at the latest. The committee said the timetable for implementing a ban as set out in the bill was not fast enough and contrasted “with the haste in which pension freedoms were introduced”.
The government confirmed in August it would ban cold calling in relation to pensions, after a consultation which found strong support for such a measure.
The committee's report said a ban would not stop all pension scams but would be an “important preventative measure”. The MPs said the government should introduce a new clause in the Financial Guidance and Claims Bill which would implement the ban next year, setting details through regulations.
“This will allow outstanding issues to be resolved without being tied to a lengthy parliamentary process. Importantly, it will also mean the ban will be future proof: capable of being adapted as scams evolve,” the report said.
Pensions scam expert Ben Fairhead of Pinsent Masons, the law firm behind Out-Law.com, said the authorities should move their focus to looking at pensions scams now, instead of addressing those which have been an issue for some time.
“The report recognises that pension scams have evolved, and the focus appears to be shifting ever more towards fraudulent investments arising from legitimately released pension funds through freedom and choice,” Fairhead said.
“No one doubts it is happening and very probably in larger than reported amounts. It would be helpful to see analysis developed so that more could be done to address the specific types of scams taking place now as opposed to being a few steps behind tackling older forms of pension scams,” Fairhead said.
“In the meantime, there is virtually unanimous agreement that a ban on cold calling, whilst not a silver bullet, would carry little downside and potentially make a difference at the very least in heightening public awareness of all types of pension scams,” Fairhead said.
The committee also looked at guidance provided to savers about their pensions choices. Although the report said the free, government-backed Pension Wise guidance was “greatly valued” by users not enough people were using it.
The committee suggested that individuals should receive guidance, or have to expressly refuse help, before they could access a pension pot. This would be implemented through strengthening a clause in the Financial Guidance and Claims Bill, with the details of what constitutes a choice not to receive any guidance to be set out in Financial Conduct Authority rules.
“Default guidance would promote shopping around, better-informed decision-making and protection against scams,” the committee said.
Pensions specialist Stephen Scholefield of Pinsent Masons said improved support would encourage individuals to take control of their pensions decisions.
“As pension options get more complicated, so does the challenge of how to help savers make the right decisions. Nudging savers towards appropriate guidance is a step in the right direction, but only part of the battle,” Scholefield said.
“We need to get people more enthused about their pension savings throughout their working life, so that guidance or shopping around isn’t a chore. If we can help people visualise their futures, they may be keener to invest the time to make the right decisions when it comes to making use of their hard earned savings,” Scholefield said.
New pension freedoms were introduced in April 2015. The reforms allowed members of defined contribution (DC) schemes more freedom to access their savings once they turn 55 without facing heavy tax charges or largely having to purchase an annuity to give them an income for life.