PLSA demands tougher action on UK and overseas pension scams
The Pensions and Lifetime Savings Association (PLSA) has called for tougher action and “more urgency” in tackling pension claiming that UK government plans to ban cold calling (including texts and emails) on pensions.
The draft legislation that affects both UK financial advisers and crosser-border financial advisers has been brought in to stem the rising number of pension complaints, scams and instances of ‘bad’ or incorrect advice that have arisen since the introduction of Pension Freedoms.
As a result of the changes vast amounts of UK-based pension pots have been accessed with being transferred into lesser regulated overseas pensions. As reported, in a bid to stem flows into QROPS schemes outside of the EU, the UK government introduced an immediate 25% levy.
Now the UK government is bidding to make it against the law to solicit pension business, partly due to the rise of overseas-based cold calling units. This draft legislation will also even include texts and emails to prospective clients.
Commenting on the UK government’s recent announcement on draft legislation to ban cold calling, James Walsh, policy lead: engagement, EU and regulation at the PLSA, said that while the move is a “step in the right direction”, more needs to be done.
“We have been calling on the government to show more urgency in tackling pension scams, so this indication of when we can expect draft legislation is a step in the right direction. But we are still a long way from the cold calling ban actually taking effect and the government will need to keep up the momentum.
“However, with the vast majority of defined benefit/hybrid schemes reporting transfer requests and almost a third rejecting some due to due diligence concerns, we feel that there is more that needs to be done.
Last week the UK government said in a statement that it is committed to banning pensions cold-calling. Following a consultation, the government will bring forward draft legislation for scrutiny to ban pensions cold-calling, including texts and emails, in early 2018.
“We would like to see the government take a more ambitious approach by introducing an authorisation regime for pension schemes,” added Walsh.
“This would mean only allowing transfers to schemes recognised as legitimate and trustworthy. Any small scheme (‘SSAS’) that wishes to receive transfers would have to include an independent trustee on its trustee board with a duty to ‘blow the whistle’ on scam-related activity.
“Alongside the new regulatory regime for master trusts and existing FCA regulation of many providers, this would be a big step towards shutting the scammers out of pensions.”