Government launches plan to ban cold calls on financial products

3rd August 2023

Plans to ban cold calls for financial products such as sham cryptocurrency schemes, mortgages and insurance have been set out with the launch of a consultation, marking the next step in delivering the Government’s Fraud Strategy.

The eight-week consultation will cover proposals to ban cold calls offering any financial products to clamp down on fraudsters seeking to trick people into buying fake investments. Once in force, people receiving a cold call offering these types of products will know that it is a scam, and fewer people will become victims.

Fraudulent investment schemes represent a significant threat to the UK economy, consumers, and society, with victims losing £750 million between 2022-23, according to data from the City of London Police.

A specialist team which provides support to victims of fraud, known as the National Economic Crime Victim Care Unit, has also been rolled out to all 43 police forces across England and Wales since the Fraud Strategy was announced.

Part funded by the Home Office, the service has existed as part of City of London Police since 2015, and is estimated to have stopped more than £2.8 million being lost to fraud. Last year its teams supported more than 113,000 victims and its rollout to all police forces will ensure more people receive the help and support they need.

Security Minister Tom Tugendhat said “Fighting fraud is at the heart of our campaign to fight crime. The National Economic Crime Victim Care Unit and the cold calling consultation are delivering on our pioneering Fraud Strategy. Fraud doesn’t just lead to financial loss, it can destroy confidence and lead to severe stress. That’s why it’s so important that victims get the best possible care and support. The cold calling consultation is an important step forward in our efforts to block fraud at source. It will have a major impact once it is in force.”

Andrew Griffith, Economic Secretary to the Treasury, said “Cold calling for financial services and products has long been used by fraudsters to manipulate and trick members of the public into scams. These cold-hearted criminals will often purposely target the most vulnerable and use a range of deceitful tactics to take advantage in any way they can. We will ban cold calling for all consumer financial services and products, so the public can be sure that it’s not a legitimate firm if they get a call about a financial product out of the blue without their consent. We want people to feel confident to put the phone down and report these illegitimate calls.”

The Financial Services and Markets Act, which received Royal Assent on 29th June, enables the Payment Systems Regulator to require payment service providers to reimburse a customer if they become a victim of authorised push payment fraud. These are frauds where the victim has been deceived into sending a payment from their bank account to a fraudster. This change will provide greater protection for victims of these frauds.

Improved support to block fraud and protect victims will also be achieved through the Online Advertising Programme, which will deliver tougher measures to tackle harms caused by illegal advertising online, including fraud.

The online advertising taskforce set up as part of the programme met for first time last week. It brings together tech trade bodies and the Advertising Standards Authority alongside the government’s Anti-Fraud Champion, Anthony Browne. The shared mission is to prevent fraudulent messaging online and stop age-restricted products being marketed to children.

Anti-Fraud Champion Anthony Browne said “80% of fraud is cyber-enabled and often starts with scam social media posts, a fraudulent email or false advertising and this makes engaging with the tech sector particularly important. Our tech sector is among the best in the world and has a proven track record for innovation. It is of the utmost importance that we work with them to bring about better protections for their customers.”

The ICO has issued more than £2,440,000 million in fines against companies responsible for nuisance calls, texts and emails in since April 2022. Some of these investigations began with a single complaint from a member of the public.

Andy Curry, ICO Head of Investigations, said “Nobody should be made to feel uncomfortable after simply answering the phone. People register with the TPS for a clear reason: to stop unwanted marketing calls and protect their privacy.”

“If you are clear you don’t want calls, and still receive them, our message is simple: hang up the phone, and report the call to us. You don’t owe nuisance callers your time or your courtesy, and we fully support proposals to ban cold calling on financial products and services.”

As part of proposed data protection law reforms, the government has proposed increasing the maximum fine for nuisance calls from £500,000 to £17.5 million.

Richard Lane, Director of External Affairs at StepChange, said “The Government’s move to ban cold calling for consumer financial services and products is very welcome progress in the fight against scammers who pose a significant threat to financially vulnerable consumers. We have seen too many cases where clients’ financial positions have been made worse by services taken out as a result of unscrupulous and unsolicited calls.”

“The consultation specifically places debt services and IVAs in scope, but a ban on cold calling will not be enough to stop the harm caused by fraudulent online ads from unregulated IVA lead generators and ‘warm callers’ that follow up. These callers have someone’s details, but their intentions may be no less unscrupulous. We’ve seen many consumers in need of debt advice at a vulnerable time preyed upon by firms posing as debt advice charities, who often route them towards an IVA from a provider paying high referral fees. The Government must use this opportunity to finally end this long standing harm.”