THE UK Government plans to ban pensions cold-calling in a bid to protect millions of pensioners and stop “cowboys” tricking the vulnerable out of their life savings.
Philip Hammond will make the announcement in his first and much-awaited Autumn Statement next Wednesday, when the Chancellor is expected - amid a raft of poor projected numbers on growth, borrowing, debt and the deficit – to try to chart a course through choppy Brexit waters with announcements on infrastructure schemes and measures to help the so-called Jams, people who are “just about managing” to get by.
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Under the new proposals, pension cold-calls, where a business has no existing relationship with someone, will be outlawed. This will include fraudsters targeting people, who inadvertently "opt-in" to receiving third party communications. Enforcement action by the Information Commissioners Office could include fines of up to £500,000.
The Treasury said that the ban would cut off the “main route through which cowboys trick people out of their life savings” and end the misery brought about by the 250 million scam calls that happen every year in the UK.
Each year, almost 11 million pensioners are targeted by cold-callers with savers reporting estimated losses of almost £19m to pensions scams between April 2015 and March 2016.
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Cold calls often present scams as unique investment opportunities such as investing a pension pot in a new hotel in an exotic location or in various ‘ethical’ projects that promise massive returns.
Many unsuspecting victims simply fail to spot the scams with nine in 10 of those choosing an offer, which included warning signs such as “free” pension reviews, extra tax savings or access to pensions before the age of 55.
The Chancellor will also consult on a wider crackdown on pensions scams by giving more powers to firms to block suspicious transfers, preventing people’s life savings being switched into scams without any checks and making it harder for the scammers to open fraudulent pension schemes, through stopping small self-administered schemes setting up using a dormant company as the sponsoring employer.
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Research shows that fraudsters could be behind as many as one in 10 pension transfer requests and the Treasury believes the new framework will cut off their scams at the source.
The Government will begin a consultation on its proposals before the end of the year and the next steps will be announced at next year’s spring Budget.
Steve Webb, the former pensions minister who is now director of policy at Royal London, the pensions and investments company, welcomed the move, saying: "If it becomes known that anyone ringing up out of the blue to offer you a special deal on pensions or investments is committing an offence, this will make it much harder for the scammers."
While Mr Hammond has abandoned his predecessor George Osborne’s target of balancing the books by 2020 and while Government borrowing is forecast to grow, he is still expected to take advantage of the cheap cost of borrowing to boost infrastructure and housing.
With tax receipts set to suffer a blow as Brexit uncertainty applies the brakes to economic growth, the Chancellor could struggle to introduce fresh tax cuts in his economic statement.
While he agreed to honour planned cuts to corporation tax from 20 per cent to 17 by 2020, his predecessor George Osborne's hopes of a further reduction to below 15 per cent now look a distant hope.
However, Mr Hammond has come under pressure from Theresa May to find room to help squeezed households facing rising costs from soaring inflation triggered by the Brexit-hit pound.
So it is expected that he will continue the freeze in fuel duty, honour the pledge to up the income tax threshold to help low earners and help further with childcare costs.
MPs in England are also pressuring the chancellor to halve air passenger duty to help families with the escalating cost of a foreign holiday, something which could undermine the Scottish Government’s attempts to do the same to boost tourism and business investment in Scotland.
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