The UK Treasury is consulting on how to introduce a ban on cold-calling that applies to all UK financial products and services.

The consultation comes against a background in which over half of all UK landline users reported receiving a suspicious call between August and November 2022, with 80% of them reporting receiving suspicious calls more than once a month. Fraud accounts for over 40% of all estimated crime in England and Wales, one in 15 adults were victims of fraud in 2022m and £2.46 billion ($3.3 billion) was lost by businesses and individuals to fraudsters in the 2021/22 financial year.

UK Fraud Strategy

The UK government announced its intention to ban cold-calling in its Fraud Strategy published on May 3. The intention is to “make the public aware that they will never be called by a legitimate firm trying to market a financial product without their consent”. The latest consultation is looking at the best way to design and implement the ban, and which body is best placed to oversee and enforce it.

Cold-calling bans are already in place in the US, where the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) stipulate that cold calls can only legally be made between 8am and 9pm local consumer time. In France, cold-call numbers must be instantly recognisable to customers, allowing them to make a better-informed decision on whether to answer.

In the UK, the current situation is complex, making it difficult to understand and enforce. Three different regulators, the FCA, the Information Commissioner’s Office (ICO) and Ofcom all have some powers to regulate cold calls (also known as unsolicited direct marketing). There are separate rules for calls about claims management services and pension schemes. The Prudential Regulation Authority (PRA) is also involved in defining persons authorised to make cold calls.

Financial services and products

As the consultation paper says: “By implementing a ban on cold calling for all financial services and products, the public can be given the simple message that anyone contacting them to sell financial services products in an unsolicited manner is acting unlawfully”.

Extending the ban on pensions scheme cold-calling to all consumer financial products and services is the government’s preferred option. But the consultation recognises that “it is possible that a broad scope could negatively impact business practices which can create value for the customer”, and so invites comment on how to mitigate this unintended consequence of a broad ban.

The paper also says “there may be a case for extending this proposed ban on financial services cold calling to other forms of live electronic communications, beyond telephone calls”, but recognises this may require a separate legislative approach. And the consultation invites comment on extending a cold-calling ban to in-person unsolicited marketing on domestic premises.

Sole traders and partnerships

It’s not only individual consumers who are targeted by fraudsters via cold calls, businesses are too. Businesses can opt in to schemes such as the Corporate Telephone Preference Service to avoid being cold called, but the paper considers whether there is a need for sole traders and other types of partnerships to be classed as consumers in relation to this ban.

The ban intends to cover a wide range of financial products, including:

• any product or service of a banking or payment nature, including crypto;
• mortgages and insurance;
• white goods warranties and protection plans;
• tangible items marketed in the manner of an investment, such as whisky and wine; and
• credit and debt.

The mechanism for enforcing a ban is a key part of the consultation. The pensions cold-calling ban was implemented through amendments to the Privacy and Electronic Communications Regulations (PECR), using powers under the Financial Guidance and Claims Act 2018. PECR sits alongside the Data Protection Act 2018 and GDPR.

PECR regulations

The UK government intends to use this framework as the basis for the ban, amending PECR regulations “to prohibit unsolicited telephone calls to an individual for the purpose of direct marketing in relation to financial services and products”. However, if the ban is extended to cover live electronic communications and face-to-face selling, this approach will need to be supplemented.

Currently, the UK government intends for the ICO to act as the enforcement agency for the ban, building on existing powers to enforce PECR, including the power to fine offenders up to £500,000 ($635,892).

The consultation is scheduled to close on September 27, 2023. The full paper is available online, and responses should be sent to financial.coldcallingban@hmtreasury.gov.uk