The government has accepted it should revisit its plans on both banning pensions cold-calling and encouraging the take-up of guidance although suggested next steps have been criticised as “light on detail”.
In a paper, Protecting pensions against scams: priorities for the Financial Guidance and Claims Bill, the government agreed with last December’s report by the Work and Pensions Committee (WPC) that recommended a ban on cold-calling be introduced more quickly than that bill had proposed and also that a ‘guidance by default’ provision be added to the same piece of legislation.
The paper noted: “Although the introduction of Clause 4 in the Bill in the House of Lords presents an opportunity to ban pensions cold calling, we agree with the committee’s assessment that Clause 4 as drafted is flawed.”
It said this was for two main reasons – that the government wanted to ban pensions cold calling more quickly than Clause 4 allows and Clause 4 did not provide details about the kind of issues that regulations to ban pensions cold calling would cover. “In particular,” the paper added, “there is no information provided on how any regulations laid would be enforced or, indeed, whether they would be enforceable.”
The government said it would continue to work swiftly to implement a cold-calling ban by tabling “a workable amendment to the Financial Guidance and Claims Bill and then making regulations to introduce the ban” – drawing criticism from Old Mutual Wealth this response was “light on details of their next steps”.
“Pension scams are a serious problem and it is crucial it is met swiftly by the government,” said the company’s responsible business director Jane Goodland. “Eyes will be peeled on what the new regulation will entail and the pressure is on for the government to get it right.”
She added:” A ban can only go so far, however, as it will not stop criminals from trying to rip-off vulnerable people. What is also needed is an awareness campaign so people know if they receive a cold call concerning their pension they should speak to Pension Wise, a financial adviser or their pension provider.”
Free, impartial guidance
The government also agreed with the WPC on the need to increase take-up of free, impartial guidance, adding it was “committed to finding ways to reach more people and continue to deliver an effective service” and welcoming the committee’s suggested amendment that sought to strengthen “the nudge towards pensions guidance”.
The paper said the government was taking “a range of actions to improve guidance take-up, in addition to making an amendment to the Financial Guidance and Claims Bill, with measures highlighted including “high-quality, multi-channel guidance”, “digital appointments” and “raising awareness of the Pension Wise service”.
Commenting on this, Pensions and Lifetime Savings Association policy lead: defined contribution Tim Gosling said: “Free and impartial guidance is a critical piece of the retirement puzzle and it will go some distance to getting savers the outcome they deserve but we do not believe guidance will be enough on its own.”
Arguing retirees who “cannot or choose not to engage with complex financial choices” have “no easy or obvious way” to find a good-quality income product, he added: “Trustees should be able to select an appropriate income product, which meets government standards, and signpost their members to it.
“Of course, retirees would be free to disregard this steer and make their own choices but providing clear signposting would help those who might otherwise have struggled to make a decision.”
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