This comes over four years after the UK signed into force a statutory instrument banning any unsolicited phone calls for direct marketing purposes in relation to occupational or personal pension schemes.

The Fraud Strategy will look to tackle fraud and “take the fight to the scammers and fraudsters”, UK prime minister Rishi Sunak said in a statement on 3 May.

He added: “Fraud now accounts for over 40% of crime. It costs us nearly £7bn ($8.8bn, €8bn) a year and we know these proceeds are funding organised crime and terror. What’s more, new technologies are making these scams easier to do and harder to police.

“It’s time to take the fight to the scammers and fraudsters, and put an end to these crimes which can devastate lives and livelihoods within seconds.

“Our plan will help protect you and your loved ones from these scams and the predators who perpetrate them. The time has come to put the fraudsters out of business. And that’s what I’m determined to do.”

Cold calling

The prime minister announced a range of different measures including the strategy to ban cold calls on all financial products.

This will be done “so that anyone who receives calls trying to sell them products such as crypto currency schemes or insurance will know it’s a scam”.

Dean Butler, managing director for customer at Standard Life, said: “People have a right to know who they are dealing with and cold calling can muddy the waters creating opportunities for fraudsters. Building on the 2019 move to ban pension cold calling and extending it to all financial products has the potential to reduce the scourge of financial fraud which causes a great deal of pain.

“While pension fraud still exists, there is widespread recognition that the cold calling ban was a step in the right direction which ultimately has made people more cautious of unsolicited pension review calls and other tactics previously employed by some fraudsters.”

Tom Selby, head of retirement policy at AJ Bell, said: “Financial scams are a scourge on society and ruin lives, so any move to protect more consumers from different types of fraud is extremely welcome. Governments cannot stop scams altogether, but they can place significant barriers in the way of those intent on committing fraud.

“For this cold-calling crackdown to work we need two things: tightly worded legislation, to ensure nefarious contacts are specifically targeted, and a legitimate threat of enforcement where someone breaks the new rules. The plans also need to go hand-in-hand with greater responsibility being taken by internet giants like Google for paid-for scam adverts, something which the Online Safety Bill can hopefully bring into UK legislation.

“The successful campaign to ban pensions cold-calling in 2019 was never supposed to be just about pensions. We have always warned that the vast majority of fraud takes place outside of pensions, usually in the form of investment ‘opportunities’ that turn out to be at best missold and at worst entirely non-existent.

“The ban on pensions cold-calling therefore needed to be seen as the beginning of a wider effort to tackle scams more generally and beef-up education. The pandemic and the subsequent cost-of-living crisis have both resulted in rising vulnerability in the UK which, depressingly, is like blood in the water to fraudsters. The pandemic in particular has also, understandably, likely meant progress in tackling scams has not been as fast as some would have liked.

“The grim reality is that, even with new rules and tough enforcement, scammers will continue their attempts to plunder people’s hard-earned savings. It is therefore vital, regardless of what the government does, that Brits keep their wits about them and are cautious when they are contacted out of the blue by someone they don’t know about their finances. Much of this is common sense, but it could save you from financial misery.”

Other measures

Also, as part of the Fraud Strategy, the UK government will outlaw so-called “Sim farms”, technical devices that allow criminals to scam texts to thousands of people at the same time and it will work with Ofcom to stop more cases of number ‘spoofing’, where scammers impersonate UK numbers and trick people into thinking they’re speaking to banks, telephone companies or other legitimate businesses.

The government will also launch a new National Fraud Squad led by the National Crime Agency and the City of London Police – backed by 400 new posts. It also said that it will “step up work with international partners and make greater use of the UK’s intelligence community” to identify and disrupt more fraudsters overseas.

Lastly, the UK government will invest £30m in a state-of-the-art reporting centre which will be up and running in 2023, work with tech companies to make it as simple as possible to report fraud online and give banks more time to process payments, to allow suspicious payments to be investigated and stopping people from falling victim to fraudsters.

City of London Police commissioner Angela McLaren said: “We welcome this strategy and the much needed investment to support our collective efforts to tackle fraud. As the national lead force for fraud, we want to do everything in our power, working with law enforcement and private sector partners across the UK, to protect people from this callous crime.”

FOI

Following the announcement that the government has launched a fresh plan to tackle fraud, figures obtained by wealth manager Quilter show that just 29% of pension fraud reports are sent for police investigation on average.

The figures from a freedom of information request demonstrate that over the last eight years less than a third (1,173) of the nearly 4,006 pension fraud reports submitted to Action Fraud were disseminated to local police forces for investigation by the National Fraud Intelligence Bureau (NFIB), which sits alongside Action Fraud.

In some years, the number of pension fraud reports to Action Fraud that were sent to the police for investigation was as low as 6%. However, in 2020 when the pandemic hit it rose to 66%. It is unclear how many of these ended up with a conviction.

According to Action Fraud, some losses can run into the millions, but the average loss to each victim is around £75,000. However, finding an accurate average can prove difficult as many victims are unaware they have fallen victim to a fraud.

Quilter said: “Pension scams are extremely complex, require considerable police resources to investigate, and in many cases are only discovered years after the event. It can often take years of information gathering and investigatory time before the police get to the point of prosecution. This means that Action Fraud and the investigatory agencies are forced to prioritise the cases they believe can lead to a successful criminal justice outcome. For the vast majority of pension scam cases, the chances of reaching this stage are slim.”

In light of difficulties in investigating pension scams, Quilter is today urging government to do more to tackle the threat of scams by making it harder for the criminals to operate and reach potential victims.

To do this, Quilter is pushing the government to make faster progress with the Online Safety Bill, which was due to have already been introduced to parliament but continues to be delayed with numerous amendments.

The creation of this Bill means search engines and social media platforms will have a legally enforceable duty to remove suspected scammers and scam adverts immediately on notification and improve their due diligence process so that it becomes much harder for scammers to market investment products using paid adverts.

‘Get a grip on fraud’

Jon Greer, head of retirement policy at Quilter, said: “Unfortunately, especially during economically difficult times, scammers thrive as hard-working people get their heads turned by too good to be true deals. These figures show that over the past few years, as finances have been stretched, many more scams have had to be passed on to local forces for investigation. This shows why it is important that the government’s new strategy gets a grip on fraud.

“Sadly, because pensions are for the long term it can be years before victims realise they have been scammed and their money has gone. Once they are uncovered pension scams are extremely complex, they can span multiple jurisdictions. This all makes investigating the scams incredibly time consuming and expensive, which is why the police have to prioritise those few cases where they have a chance of success.

“The pension transfer regulations brought in 2021 have had a positive impact on highlighting scams. However, even with those regulations in place scams are still being perpetrated making the Online Safety Bill an important piece of the puzzle.

“Getting retribution for a pension scam can be tricky so we should be going to the root of the problem and that starts with getting the Online Safety Bill over the line. The government continue to risk people losing their life savings while this legislation stalls.”

The Information Commissioner’s Office (ICO) discovered that the company made 107,003 unsolicited phone calls to clients to talk about occupational and personal schemes between 11 January and 30 September 2019.

The UK government banned cold calling for pensions from 9 January 2019.

EB Associates was not allowed to call people in an unsolicited manner and did not have their consent to do so either. The firm also used lead generators to make calls on its behalf and paid up to £750 for the referrals, the ICO found.

As a result, it has been ordered to stop any further cold calling or face court action.

Andy Curry, head of ICO investigations, said: “Our priority is to protect people and we will always take robust action against companies operating illegally for their own financial gain.

“Cold calls about pensions were banned to protect people from scammers trying to cheat them out of their retirement plans. We encourage anyone who receives an unexpected call about their pension to hang up and then report it to us.”

International Adviser contacted EB Associates Group but it did not reply in time for publication.

Operating under the trading name Your Pension Options, the firm called members of the public about possible pension reviews to then arrange an introduction to a financial adviser.

The firm admitted to making 96,817 calls, with the ICO receiving 16 complaints.

But pensions cold-calling was made illegal in the UK in 2019. There are some exceptions to the ban, however PB did not qualify.

It will now need to pay £50,000 ($70,000, €59,000).

No informed concent

The ban on pensions cold-calling only allows firms to contact people if:

• They are authorised by the Financial Conduct Authority,
• They are the trustee or manager of an occupational of personal pension, and
• The recipient consented to being called or has an existing relationship with the caller.

Personal data was sourced from a third-party supplier.

The information was collected from various websites after people agreed to receive marketing materials from several sectors and organisations, but they were seemingly unable to select which ones they were happy to hear from.

The ICO said that, as such, PB did not have informed consent from the people it called.

On top of the fine, the pension firm has also been given an enforcement notice ordering it to stop making further calls.

‘Tough action’

Andy Curry, ICO head of investigations, said: “Cold calls are a common way of attempting to defraud people out of their pensions and we will take tough action where we find companies carrying out this kind of marketing.

“The law was updated specifically to protect these often-vulnerable people and their retirement funds.

“Companies are responsible for knowing the law and following it. We have a range of powers and enforcement action which we can and will take on behalf of the public to put a stop to the activities of unscrupulous companies.”

This includes the “requirement to act in their clients’ best interests and the requirement to act honestly, efficiently and fairly”, the Australian Securities and Investments Commission (Asic) said.

The high court dismissed the bank’s appeal that it breached the Asic Corporations Act by providing personal financial product advice with calls made to 14 customers.

Neither company had a licence to provide personal financial advice.

Details

On 28 October 2019, Asic won an appeal in the full federal court against WSAL and BTFM with respect to two telephone campaigns by the Westpac companies which recommended that customers roll out of its other superannuation funds into a Westpac-related superannuation account.

As a result of the campaigns, Westpac increased its funds under management by almost A$650m (£363m, $495m, €412m) between 1 January 2013 and 16 September 2016.

The decision of the high court clarifies the difference between general and personal advice for clients and financial services providers.

The matter will now return to the federal court for a hearing on compensation. Asic said it will seek orders for pecuniary penalties in relation to WSAL and BTFM’s conduct.

‘Clarity’

Danielle Press, Asic commissioner, said: “The high court has provided clarity concerning the differences between personal advice and general advice. Westpac were actively conducting a sales campaign aimed at rolling customers into Westpac products under the banner of general advice.

“By clarifying the distinction between tailored, quality, personal advice in the customer’s interest, and general advice given via a sales campaign, today’s judgment will provide clear guidance to those financial institutions that develop campaigns to sell financial products through direct approaches to retail clients.

“Asic will continue to bring enforcement action against misconduct, including advice that is not in the best interest of clients.”

The bank said: “Westpac acknowledges today’s decision by the High Court of Australia which has dismissed Westpac’s appeal in relation to proceedings brought by Asic about the provision of financial product advice.”