A consultation on the proposed ban, along with other measures to tackle pension scams, closed in February. The government is yet to publish its response.
Peers, including former pensions minister Baroness Altmann, have suggested that the ban be included in the bill, which is currently progressing through parliament. However, the Department for Work and Pensions (DWP) has now ruled this out, saying that the bill was being kept “relatively and deliberately small”.
“The government takes the threat of pension scams very seriously,” said the DWP’s Baroness Buscombe, during a debate on the bill.
“The government plans to publish its response to [the pension scams] consultation shortly, setting out our intended next steps. It is a complex area that requires careful and detailed consultation with stakeholders during the year. In particular, there are questions of how to define existing relationships and how to deal with referrals and third parties. As such, we do not propose to include a cold-calling ban in the bill at this time,” she said.
Once in force, the Financial Guidance and Claims Bill would create a legal framework for the proposed single financial guidance body, and enable the transfer of responsibility for the regulation of claims management companies from the Ministry of Justice to the Financial Conduct Authority.
In its consultation paper of last year, the government had proposed the introduction of an outright ban of cold calling relating to pensions, to be enforced by the Information Commissioner’s Office using its existing powers to impose civil sanctions and fines on UK-based firms. “Legitimate” interactions, including where consumers had expressly requested information from a firm or where there was an existing client relationship, were excluded from the ban as proposed.
Pensions expert Ben Fairhead of Pinsent Masons, the law firm behind Out-Law.com, said that the “momentum” that had built up around the ban and the other legislative proposals, which had included limiting the statutory right to transfer pension savings into another occupational scheme to cases where there was a ‘genuine employment link’, had appeared to have “evaporated”.
“No mention was made in the Queen’s Speech and it is difficult, as a result, to see the changes put forward by the DWP in its consultation being addressed in any new legislation for the next two years,” he said. “That would be disappointing after some sensible ideas were identified - and surely the sort of ideas a minority government would have secured some cross-party support on.”
“In the meantime, the law remains unsatisfactory in terms of the ease with which a scammer can market a scheme and also establish the statutory right to a transfer, applying pressure on a trustee to make a transfer. Trustees and providers therefore remain in an invidious position,” he said.
That said, Fairhead added that the number of suspicious transfer requests appeared to have fallen in recent months, at least anecdotally. Figures published in May by the National Fraud Intelligence Bureau appeared to show a dramatic decrease in reports of suspected cases of pension fraud, although the value of the cases actually reported increased over the same period.
“It may be that the scams have become more subtle and sophisticated or that the fraudsters have simply moved on to the investment market,” he said.
“We cannot be complacent, and the relative ease with which the risk of pension scams could be reduced still makes legislative change attractive. However, it is possible that, by the time the government does finally act - a good few years after the proliferation of pension scams - the horse will have well and truly bolted,” he said.