Budget: Advisers caught up in pension cold calling ban

In a consultation paper, released alongside yesterday's Budget documents, the government said that once the ban comes into force, "the small proportion of IFAs that use lead generation firms will need to stop using the services of these firms".

Respondents to the paper also called for an exemption for calls from authorised advisers following referrals.

However the government said it was keen to minimise workarounds to the ban, adding that "carving out a specific exemption for referrals potentially opens loopholes which could be exploited by scammers".

It clarified that the ban will capture all unsolicited direct marketing calls, including from authorised advisers.

The paper explained: "Where a referral is made, the individual who has been referred will need to contact the firm directly in the first instance."

The majority of respondents said they didn’t have quantifiable data on the impact on the legitimate business of marketing firms which undertake pensions cold calling, but the majority believed there would be "no impact or that the impact would be marginal".

Some respondents also suggested that the FCA should update its rules to include a ban on regulated firms buying leads obtained from cold calling. The government said that the FCA will "keep this proposal under review as the effectiveness of the ban is monitored".

The consultation paper also revealed that the maximum penalty for breaking the ban will be £500,000, which can only be issued against an organisation and not against individual directors.

The paper concluded that regulations on cold calling are expected to drafted this year and will come into force "as soon as possible thereafter".

Kate Smith, head of pensions at Aegon, commented: “Finally, subject to parliamentary approval the government is going to implement the ban on pension cold-calling. Although we still haven’t got a date, we welcome this commitment and are hopeful the ban will become a reality sooner rather than later.

“The pension cold-calling ban has been long-time coming and although it won’t be the panacea, a ban will go some way to protecting people from pension scammers.

“For the ban to be effective, it needs to be accompanied by a public awareness campaign. So we’re pleased to see that the government will work with partners to make sure people are aware that pension cold-calling will be illegal, once the ban is in place.”