The insurance sector may need to challenge the government’s incoming ban on cold calling, a compliance expert has claimed, while a lawyer has warned the ban’s impact may have little impact as it does not tackle foreign boiler rooms.
The warning follows prime minister Rishi Sunak’s announcement that the government will ban “cold calling” on all financial products, including insurance such as protection and private medical cover.
The plan was released by Sunak as part of a strategy to tackle the almost £7bn worth of fraud conducted every year in the UK.
This means anyone who receives calls trying to sell them products such as crypto currency schemes or insurance would know it was a scam.
Branko Bjelobaba, principal at consultancy Branko, told Health & Protection the government’s move could have a “massive” impact on protection and private medical insurance advisers.
“The lead would have to be warmed up beforehand but how would that happen?” Bjelobaba continued.
“Many advisers simply buy lists of potential contacts and then call. I think the insurance sector might have to mount a challenge to this.”
‘What is a cold call?’
Brian McDonnell, partner at law firm McDonnell Ellis, told Health & Protection much would depend on what the government constitutes as cold calling.
“It depends on what the ban covers and what a cold call is,” he said.
“If it’s just extending the existing restrictions on cold calls, the industry is already working with firms and there are definitions of cold calls.
“If it’s going to be replacing that or further limiting the extent to which unsolicited calls can be made even under the current rules, then that will obviously represent a challenge for the industry.”
However, McDonnell warned the real problem the financial services sector faced was around criminals operating from overseas boiler rooms, for example pretending to be a mobile phone company trying to renew the consumer’s contract when all they want is their bank details .
“It’s all very well further restricting the regulated sector,” McDonnell continued.
“But it’s not the regulated sector where this fraud is coming from. It’s the unregulated sector, so it’s how the government enforces the unregulated sector in particular where they are outside of their jurisdiction.
“It’s all very well increasing the police officers by hundreds in order to achieve the fraud strategy but a lot of this is emanating from overseas. It’s not coming from the regulated sector.”
SIM farms and spoofing
Plans were also announced to outlaw so-called “SIM farms”, technical devices that allow criminals to send scam texts to thousands of people at the same time.
And it said it will work with regulator Ofcom to stop more cases of number ‘spoofing’, where scammers impersonate UK numbers and trick people into thinking they are speaking to banks, telephone companies or other legitimate businesses.
In support of the plans government also revealed it will invest £30m in a state-of-the-art reporting centre which will be up and running in the year.
There will also be work with technology companies to make it as simple as possible to report fraud online and explore ways banks can be given more time to process payments, to allow suspicious payments to be investigated and stop people from falling victim to fraudsters.
A new National Fraud Squad is being launched led by the National Crime Agency and the City of London Police and backed by 400 new posts.
Counter fraud work will step up with international partners and make greater use of the UK’s intelligence community to identify and disrupt more fraudsters overseas, the government added.