MPs on the Commons Work and Pensions Committee have urged the Government to ban pension cold calls by June 2018 and to introduce compulsory consumer guidance before pension pots can be accessed.

Committee MPs says the Government should use the Financial Claims and Guidance Bill currently going through Parliament to introduce the ban in a move that ramps up pressure on the Government to act now to commit to a date for the long-awaited pension cold call ban.

MPs also want to make pension guidance via Pensions Wise or an equivalent agency compulsory before pension pots are accessed, unless pension saver insist on opting out.

Frank Field MP, chair of the Committee, said: "Every day that passes without a ban, people are being avoidably conned out of their life savings. There is no need to overcomplicate this: our proposal would see an enforceable ban in place by summer, closing at least one door on rafts of scammers at a stroke.

“Low saver engagement and high financial value makes pensions rich pickings for scammers offering fantastical returns or seemingly clever advice. The strongest weapon in the armoury against this is good advice and guidance - people just aren’t taking it.

“Making guidance the default option combined with the ban on cold calling would be a simple but big step forward in consumer protection in the era of pension freedoms. The Government should use the Bill that has just arrived in the Commons to legislate to protect pensions now."

The move has been broadly welcomed by pension experts and commentators although it will require a government commitment to change the bill.

Former Pensions Minister Baroness Ros Altmann said: “The Work and Pensions Select Committee is calling on the Government to urgently improve protection for people's pensions. This is absolutely right.

“Too many people are losing their pensions as a result of fraudulent cold-callers who entice them to transfer their hard-earned savings into scam schemes. The sooner these measures are passed and implemented, the safer our pensions will be.”

She added: “The Financial Guidance and Claims Bill... is going through Parliament at the moment. It is also calling for everyone to be automatically offered an appointment with the Government's free financial guidance service before they transfer money out of their pension. These measures would significantly improve consumer protection.”

Tom Selby, senior analyst at AJ Bell, said: “The Committee is bang on the money when it comes to banning pensions cold-calling. Introducing this vital preventative measure needs to be a priority for the Government – failing to do so leaves savers at increased risk of being conned by fraudsters.”

The Commons Select Committee says that pension savings are under threat from scams, which span beyond simple stealing of money.

It says: “The combination of high financial value and low saver engagement has made pensions a scammer's "perfect storm”.”

Archetypal inappropriate investments are high risk, highly illiquid and unregulated – the Committee heard of examples like schemes to invest in "diamonds, overseas property developments, store pods, forestry and film".

The committee says cold calls are the “leading driver” of pension scams and action is desperately needed to protect individuals from the risk of losing their life savings.
It wants a new clause  in the Bill requiring the Government to introduce a ban by June 2018 at the latest.

It also wants Clause 5(2) of the Bill strengthened to create a “guidance by default” provision that ensures an individual either receives or expressly refuses guidance before being granted access to a pension pot.

The details should be set out in Financial Conduct Authority rules, it says, following public consultation. It believes ‘guidance by default’ would promote shopping around, better-informed decisions and protection against scams.

• On Wednesday the Committee will hear evidence on the British Steel Pension Scheme, which the Chair has described as a "honeypot for scammers".