PIMFA, the trade association for wealth management, investment services and the investment and financial advice industry, has urged HM Treasury (HMT) to provide a clear definition of client relationships in its response to the government’s consultation on banning cold calling for all financial services products.
Currently, the cold calling ban only applies to pension products, but HMT is seeking to extend the ban to all financial services products.
While PIMFA broadly welcomes the ban and recognises that unsolicited calls in relation to financial services and products have the potential to cause serious harm to consumers and put them at risk of fraudulent or scam phone calls, it is concerned that the definition of a “client relationship” is not as clear cut for the investment industry as others, and there is potential for firms to be caught out by the cold calling ban, despite contacting existing customers.
The relationship between investment managers, wealth managers and financial advisers and their clients is, by its very nature, long-term, meaning clients may not have regular interactions with their wealth manager or financial adviser.
PIMFA believes such relationships need to be provided for within the forthcoming ban and would even be willing to work with the HMT to provide specific wording to ensure such longer-term client relationships are protected within the ban.
PIMFA would also like to see the Government undertake a public awareness campaign to ensure consumers are made aware that should they receive a phone call offering them a financial service or product, they know it is likely to be fraudulent or a scam.
At PIMFA’s recent Compliance Conference, the Government’s anti-fraud champion, Anthony Browne MP, told delegates the officials were working with telecoms companies to try to reduce the number of scam phone calls the public receives and that most, if not all, telecoms companies have signed up for the Government’s Fraud Prevention Charter.
But as official figures show 41% of all crime in the UK is fraud with more than 3 million people and businesses a year becoming victims of scams, and more than 70% of fraud is generated abroad.
Maria Fritzsche, senior policy adviser at PIMFA, commented: “Banning cold calling of all financial services and products is an important step in protecting the public from fraud and scams and may help the Government achieve its target of reducing fraud by 10% on 2019 levels by December 2024.
“But we do have concerns that the definition of a client relationship isn’t as clear as it could be and may capture legitimate firms who simply want to contact their existing client but may not have spoken to them in a while.
“We also think it is vital that the ban on cold calling for financial products and services be accompanied by a strong public awareness campaign to educate the public about the new ban and ensure they understand that if they receive an unexpected call offering them a financial product or service, it is almost certainly a scam, and they should hang up the phone.
“This, together with stricter rules on the promotion of crypto-assets and the Online Safety Bill having passed its final reading in the House of Lords, will mean there are more protections for consumers than ever before. But in putting in place those protections, we should be careful not to prevent legitimate firms from contacting existing clients to discuss products or services that may be genuinely beneficial for them.”