Pensions cold calling ban regulations released for consultation

The new legislation, if finalised as proposed, would update existing 'e-Privacy' laws in place in the UK which govern direct marketing activities and could be laid before the UK parliament this autumn.

"We intend to amend regulation 21 [of the Privacy and Electronic Communications Regulations (PECR)] to include an opt-in model for unsolicited direct marketing calls relating to pensions," the Treasury said.

"This will prohibit cold calling in relation to pensions unless: the caller on the line is an FCA-regulated or TPR-regulated person and the customer consents to such calls being made by, or at the instigation of, the caller on that line; or the caller on the line is an FCA-regulated or TPR-regulated person and the recipient of the call has an existing client relationship with the caller or instigator of the call and the relationship is such that the recipient envisages receiving unsolicited calls for the purpose of direct marketing in relation to pension scheme," it said.

"The regulations have been drafted with the intention that they are broad enough to capture a wide range of activities through which people could be encouraged to use their pensions savings in order to invest in inappropriate or scam investments, but also narrow enough that they prevent workarounds and loopholes," it said.

The UK's data protection watchdog, the Information Commissioner's Office (ICO), would be responsible for enforcing the new regulations. It would have powers to issue fines of up to £500,000 against companies that breach the law, according to the proposals. The ICO plans to issue updated guidance on compliance with PECR ahead of the ban on pensions cold calling coming into force, the Treasury said.

The government first announced its intention to ban pensions cold calling in August 2017 after a consultation which found strong support for the measure, but did not indicate at the time when it would introduce the ban.

The government was subsequently prompted to introduce an amendment to The Financial Guidance and Claims Act passing through parliament in early 2018 after a UK parliamentary committee called on it to take "urgent legislative action" on the issue late last year. The Act became law in May and gave the government the power to introduce a ban on "unsolicited direct marketing" relating to pensions.

A consultation has now been opened by the Treasury until 17 August on the draft pensions cold calling ban regulations.

Pensions expert Ben Fairhead of Pinsent Masons, the law firm behind Out-Law.com, said: "On the face of it, the draft regulations seem simple, and there will be some frustration that they have taken this long to prepare – and also that they are now subject to a further period of consultation. The timeframe for a response is relatively short though, and there is a definite sense from the consultation document that the government is eager to ensure, after so much build-up and pressure to bring in this ban, that it does not inadvertently create problems for legitimate business or, alternatively, at the other end of the spectrum, leave an obvious lacuna for fraudsters to exploit."

"The fact remains though that the ban is likely to have more influence in terms of raising public awareness than it will in deterring pension scammers. The news that the Pensions Regulator is being impersonated on calls to pension holders suggests the fraudsters are already thinking ahead," he said.

Last week the Pensions Regulator (TPR) warned that fraudsters had been impersonating its staff in telephone calls to pension holders. It said it had referred the two cases reported to it to the ICO for investigation.

"Neither of the individuals who have contacted TPR about the bogus calls were tricked into handing over their details or any funds to the fraudsters," it said at the time. "However, as only a minority of scam attempts are ever reported, many more people who have not yet come forward may have been approached by the cold-callers."

Mike Broomfield, TPR’s head of intelligence, said the regulator would "never cold-call people about their pensions".