HM Treasury Consultation: Ban on Cold Calling for Consumer Financial Services and Products
September 2023
Introduction
The role of the independent Older People’s Commissioner for Wales is to protect and promote the rights of older people living in Wales. The Commissioner routinely scrutinises those policies and practices, with the potential to impact the rights of older people.
Stopping the abuse of older people in Wales in all its forms is a key priority for the Older People’s Commissioner. The Commissioner has spoken to many older people who are worried about the risk of financial fraud, and she therefore welcomes the opportunity to respond to the UK Government’s consultation on a ‘Ban on Cold Calling for Consumer Financial Services and Products’.
There are many different forms of financial abuse potentially affecting older people. Traditionally, research has focused upon intrafamilial financial abuse (that is, abuse perpetrated within families, by other family members) [1]. More recently, however, there has been an increased awareness of “the threat posed by financial scams and mass marketing fraud”[2]. Here, financial abuse is generally perpetrated by someone unknown to the older person.
Financial abuse is one of the most prevalent forms of abuse experienced by older people.[3] The levels of financial abuse and economic crime perpetrated towards older people were found to increase throughout the Covid-19 pandemic. [4] [5] There is also no doubt that older people’s experience of financial abuse and fraud will escalate because of the cost-of-living crisis [6].
The comments made follow the numbering of the questions within the consultation document.
Question 1: In your experience, what are the main harms caused by cold calling to market financial services and products?
Cold calls or ‘nuisance calls’ leave many older people feeling anxious, stressed, and “intimidated” [7]. Older people often describe feeling “pressured” into buying goods and services, when confronted with a caller [8]; within such situations they do not have time to weigh up the value of any potential purchase. Some older people may end up paying inordinate amounts of money, for goods and services which they do not necessarily want or need. By whichever means it occurs, financial fraud can have a catastrophic impact [9]. Those who experience fraud “share many of the same devastating outcomes as their counterparts who have suffered a serious violent crime.”[10] Some victims of fraud have committed suicide.[11]
Any person, of any age, can be a victim of fraud. Research shows, however, that the consequences of financial fraud and economic crime can be especially damaging for an older person [12]. Older people who experience fraud suffer significant practical, emotional, and psychological consequences. The following example was provided by one of the Police representatives attending the Commissioner’s Stopping Abuse Action Group [13]. It highlights the significant consequences of financial fraud, upon the lives of older people. Within the scenario, an older man describes the impacts of having been defrauded of more than £140,000 by rogue traders:
“I have been left feeling embarrassed, taken advantage of and I am really upset with myself. I find it hard to concentrate on anything other than what has happened and now I’m currently living on my state pension, too afraid to put the heating on and too afraid to run up too many extra costs. I have an energy monitor and I’m restricted to keeping the costs to £1 a day.”
The older person describes the abuse as having significant practical impacts upon his quality of life (he is concerned about the costs of heating and must carefully monitor what he spends). He also describes the emotional impacts of the abuse, describing feelings of embarrassment, humiliation, and shame.
Many older people affected by financial abuse withdraw from family and friends; their increased social isolation can lead to depression.[14] Others experience a decline in their physical health and wellbeing, resulting in a loss of independence.[15]
Research shows that when an older person is defrauded in their own home, they are 2.5. times more likely go into residential care or to die within a year of being scammed.[16]
Question 2: Do you agree that the cold calling ban should capture live telephone calls to an individual?
The Commissioner agrees that the cold calling ban should capture live telephone calls to an individual. As highlighted within the consultation document, telephone conversations offer fraudsters unique opportunities to gauge the responses, anxieties, and concerns of their potential victims and to therefore extract significant sums of money. Whilst research suggest an overall decline in levels of landline usage, [17] older people are amongst the most likely to continue to use their landline at home. [18] For such older people, the telephone offers an important means of maintaining contact with family and friends. Age UK reports that in 2017, there were 3.9 billion nuisance phone calls and texts, the equivalent of 7,420 a minute [19]. Six in ten of those over the age of 75 reported receiving a suspicious call to their landline in 2021.[20]
Question 3: To what extent does direct unsolicited marketing of financial services or products take place through live, electronic communications, other than telephone calls? What is the impact if these communications are not captured by the ban?
It is important that the ban is implemented as widely as possible (to include, for example, social media platforms such as ‘Facebook’ and ‘WhatsApp’). There is a risk that fraudsters will move to using such platforms to make ‘cold calls’, if they are not included within the ban; this in turn, will place individuals at financial and economic risk.
Question 4: Are there existing safeguards in place via social media organisations which already against fraudsters using social media voice and video calls for the purposes of cold calling?
The Commissioner’s discussions with stakeholders suggest that existing social media safeguards should be improved, to ensure that consumers are adequately protected.
Question 5: To what extent does marketing of financial services or products take place through door to door selling?
Research shows that door to door selling is a significant problem and that the incidence of fraud through door-to-door contact, increased throughout the pandemic.[21] It is concerning that doorstep fraudsters often deliberately target older people.[22] [23] Fraudsters often believe that an older person is more likely to be at home during the day, or that they will be easier to manipulate.[24]
Question 6: How could a cold calling ban be made to be effective in preventing door-to-door selling for financial services and products?
It is important that the Government raises awareness of the ban on cold calling, as broadly as possible. People need to be made aware of the various means of cold calling (telephone, online and doorstep, for example), and that the ban covers cold calling in all these situations. Publicity needs to specifically be targeted at older people to ensure awareness of the ban.
Question 7: Are there any other forms of cold calling aside from electronic communications and in person selling that cause harm to consumers?
Advances in technology and increasing use of AI (‘artificial intelligence’), are likely to result in fraudsters developing new ways of engaging in fraudulent activity. ‘Impersonation scams’ are a particular, potential concern. It is important that the legislation provides scope to cover these additional and evolving risks.
Question 8: Should sole traders and other types of partnerships (outside of limited liability partnerships and Scottish partnerships) be captured in this ban on consumer financial services and products?
The Commissioner agrees that the ban should capture sole traders and other types of partnerships, outside of limited liability partnerships and Scottish partnerships. Independent Financial Advisors can act as sole traders, for example, and should be subject to the same levels of scrutiny as larger businesses and corporations. The aim of this process is to simplify the rules and regulations around cold calling. ‘Loopholes’ are likely to make it harder for older people and others to know when (under which circumstances), cold calling is legitimate. Such uncertainty will increase the risk of financial abuse and fraud.
Question 9: Do you agree that the scope of the ban should include the products and services set out in the section above? Are there any other products that should fall within the scope of the proposed ban on consumer financial services and products and cold calling?
It is important that the ban on cold calling is implemented as broadly as possible. It should cover as many products and services as possible to reduce the risk of fraudsters redirecting their activities to other products and services, which are not included in the legislation.
Question 14: How else can the government ensure that customers are aware of the ban?
“Increasing public awareness and empowering older people are central aspects of financial abuse prevention and intervention,”[25] and it is critically important that older people are made aware of the extensions to the cold calling ban. Significant numbers of older people within Wales do not have access to, or do not wish to use, digital technology. [26] It is important that awareness is raised through both digital and non-digital means (information must be produced in written formats such as in printed leaflets, or newspapers, for example). A targeted awareness raising campaign (aimed specifically at older people), will be important to ensure that awareness is raised as widely as possible, and that older people are not disadvantaged in terms of information provision.
Question 18: What impacts would you expect to see on persons with the protected characteristics mentioned as a result of the ban on cold calling for financial services and products?
Age is a protected characteristic under the 2010 Equality Act. There is a great deal of research to show that older people are at particular risk of fraud and economic crime. Evidence from National Trading Standards indicates that over half of people over the age of 65 have been targeted by scammers[27] . Similarly, Age UK found that over 5 million people over the age of 65 in the UK believe they have been targeted by scammers [28] and that an older person typically becomes a victim of fraud every 40 seconds [29]
The circumstances of some older people might increase their risk of becoming a victim of financial fraud. Older people are sometimes targeted by potential offenders because they are considered to have high levels of assets, [30] for example. Loneliness is known to increase an older person’s vulnerability to abuse, and many older people describe feelings of loneliness [31] Older people with dementia are known to be at particular risk of financial abuse and fraud.[32] [33] The proposals to extend the ban on cold calling are therefore very important to protect and uphold the rights of older people.
It is critical, however, to strike a balance between acknowledging the additional risks faced by some older people, and unfairly labelling all older people as ‘vulnerable’ and in need of additional financial protection. This is clearly not the case. When older people are treated as a homogenous, ‘vulnerable group’, differences in members of the older population and the many skills and capabilities possessed, go unrecognised. Most older people manage and protect their own finances independently and without issue. It is important that the amended legislation is written inclusively and that it clearly recognises that anyone, of any age, can experience financial fraud.
It must also be recognised that too much focus upon ‘vulnerability’, can lead to a situation within which people are somehow blamed for becoming a victim of financial fraud” [34]. It is too often the case that victims of fraud and financial crime are presented as gullible, susceptible, and as therefore partly responsible for their experiences. Such discourses “fail to acknowledge the complexity of how many victims are targeted and the highly skilled offenders who manipulate and exploit victims through sophisticated social engineering techniques”.[35] it is important to address some of the language / terminology used within the consultation document. References to people being “duped” (pg. 11) into fraudulent “fake investments or financial products” are unhelpful, and feed into this narrative. Research shows that many older people worry about being blamed or being held responsible for financial fraud and that they do not, therefore, disclose their experiences.[36]
Question 19: Do you have any other views or information the government should consider in relation to the proposed ban on cold calling in relation to financial services and products?
As a rule, the proposal to simplify the existing legislation is positive. Extending the ban on cold calling (and raising awareness of this extension), will help ensure that many older people are empowered to protect themselves from financial fraud. It must be recognised, however, that for some older people (older people with memory loss because of dementia, for example), these measures will not be sufficient to protect against financial fraud. Equipment such as ‘call-blockers’ must be made widely available and front-line health and social care practitioners should receive training to ensure that they can quicky recognise the signs of financial fraud and economic abuse.
Banks and other financial services also have a critical role in preventing and detecting the financial abuse of older people. Those working within financial services can help consumers avoid becoming a victim of fraud: “they can educate and warn customers; spot and challenge suspicious payments and patterns (e.g., cheque usage); deny fraudsters access to a bank account; and provide support to customers who become victims” [37].
Summary
Significant numbers of older people are affected by fraud every year in the UK, with devastating financial and emotional consequences. Insofar as it simplifies the existing rules and regulations, the proposals to extend bans on cold calling to help prevent fraud is an important step in the right direction. It is important that this ban is implemented as widely as possible, so that fraudsters cannot simply move on to alternative ways of ‘cold calling’ potential victims. It is critical that older people are made aware of these extensions and that information is made available in a variety of formats, via the implementation of an effective, targeted information campaign..
References
[1] Fenge, L.A. and Lee, S. 2018. Understanding the Risks of Financial Scams as Part of Elder Abuse Prevention. British Journal of Social Work (48), pp. 906-923.
[2] Fenge, L.A. and Lee, S. 2018. Understanding the Risks of Financial Scams as Part of Elder Abuse Prevention. British Journal of Social Work (48), pp. 906-923.
[3] Phelan, A., McCarthy, S. and McKee, J. 2018. Safeguarding Staff’s Experiences of Financial Abuse. British Journal of Social Work (48), pp. 924-942.
[4] BBC News. 2021. Covid Fraud – £34.5m stolen in pandemic scams. Available at: Covid fraud: £34.5m stolen in pandemic scams – BBC News
[5] Offcom. 2022. Coronorvirus scams, calls and texts. Available at: https://www.ofcom.org.uk/phones-telecoms-and-internet/advice-for-consumers/scams/coronavirus-scam-calls-and-texts
[6] Which? 2023. Cost of Living Crisis Fuels Investment Scam Concerns. Available at: Cost of living crisis fuels investment scam concerns – Which? News
[7] Reynolds, M. 2018. Elderly tormented daily by scourge of nuisance cold callers. Available at: Elderly ‘tormented daily’ by scourge of nuisance cold callers | UK | News | Express.co.uk
[8] Age UK. 2019. Policy Position Paper: Crimes and Scams (England and Wales). Available at: ppp_crime_and_scams_england_and_wales.pdf (ageuk.org.uk)
[9] Wendt, S., Bagshaw, D., Zannettino, L. and Adams, V. 2015. Financial Abuse of Older People: A Case Study. International Social Work 58(2), pp. 287-296.
[10] Marsh, I. 2004. Criminal Justice: An Introduction to Philosophies, Theories and Practice. London: Routledge.
[11] BBC News. 2021. Gwynedd man killed himself after paying romance scammers. Available at: Gwynedd man killed himself after paying romance scammers – BBC News
[12] Kingston, P. 2015. Scams can have a devastating impact upon older people’s health. Available at: Scams can have a devastating impact on older people’s health | Paul Kingston | The Guardian
[13] The Commissioner established the Stopping Abuse Action Group in 2020, to help address the heightened risks of abuse to older people throughout the Covid-19 pandemic. The group continues to run bi-monthly and is now attended by over thirty, partner organisations.
[14] National Trading Standards Scams Team. 2017. Think Jessica: Shocking Facts. Available at: Shocking Facts | Think Jessica
[15] Phelan, A., McCarthy, S. and McKee, J. 2018. Safeguarding Staff’s Experiences of Financial Abuse. British Journal of Social Work (48), pp. 924-942.
[16] Older People’s Commissioner for Wales. 2021. Support Services for Older People Experiencing Abuse in Wales. Available at: Support_Services_for_Older_People_Experiencing_Abuse_in_Wales.pdf (olderpeople.wales)
[17] BBC News. 2021. Is it the end of the line for landline phones? Available at: Is it the end of the line for landline phones? – BBC News
[18] Offcom. 2020. Declining calls and challenging behaviour.
[19] Age UK. 2019. Policy Position Paper: Crimes and Scams (England and Wales). Available at: ppp_crime_and_scams_england_and_wales.pdf (ageuk.org.uk)
[20] Offcome. 2021. 45 million people targeted by scam calls and texts this summer. Available at: https://www.ofcom.org.uk/news-centre/2021/45-million-people-targeted-by-scams
[21] Wales On-Line. 2020. Suspicious doorstep callers knocking on elderly people’s doors in Pontypridd see police issue new warning. Available at: Suspicious doorstep callers knocking on elderly people’s doors in Pontypridd sees police issue new warning – Wales Online
[22] Age UK. Doorstep Scams. Available at: Doorstep scams | Scams and fraud | Age UK
[23] Action Fraud. 2019. Most vulnerable in society are more at risk of falling victim to scammers. Available at: Most vulnerable in society are more at risk of falling victim to fraudsters | Action Fraud
[24] Which? 2021. Doortsep scams and how to avoid them. Available at: Doorstep scams and how to avoid them – Which?
[25] Phelan, A., McCarthy, S. and McKee, J. 2018. Safeguarding Staff’s Experiences of Financial Abuse. British Journal of Social Work (48), pp. 924-942.
[26] Older People’s Commissioner for Wales. 2021. State of the Nation. Available at; State-of-the-Nation-2021-Report.pdf (olderpeople.wales)
[27] Older People’s Commissioner for Wales. 2021. Support Services for Older People Experiencing Abuse in Wales. Available at: Support_Services_for_Older_People_Experiencing_Abuse_in_Wales.pdf (olderpeople.wales)
[28] Age UK. 2019. Policy Position Paper: Crimes and Scams – England and Wales. Available at: https://www.ageuk.org.uk/globalassets/age-uk/documents/policy-positions/housing-and-homes/ppp_crime_and_scams_england_and_wales.pdf
[29] Age UK. 2019. Older Person becomes a victim of fraud every 40 seconds., Available at: OLDER PERSON BECOMES FRAUD VICTIM EVERY 40 SECONDS| PRESS RELEASE | AGE UK
[30] Cross, C. 2015. No laughing matter: Blaming the victim of online fraud”. International Review of Victimology 21(2), pp. 187-204.
[31] Age UK. 2018. All the Lonely People: Loneliness in Later Life. Available at: loneliness-report_final_2409.pdf (ageuk.org.uk)
[32] Older People’s Commissioner for Wales. 2021. Support Services for Older People Experiencing Abuse in Wales. Available at: Support_Services_for_Older_People_Experiencing_Abuse_in_Wales.pdf (olderpeople.wales)
[33] Alzheimer’s Society. 2011. Short-Changed: Protecting People with Dementia from Financial Abuse. Available at: Short Changed: Protecting People with Dementia from Financial Abuse (alzheimers.org.uk)
[34] Cross, C. 2016. “They’re very lonely”: Understanding the Fraud Victimisation of Seniors. International Journal for Crime, Justice and Social Democracy 5(4), pp. 60-75.
[35] Cross, C. 2015. No laughing matter: Blaming the victim of online fraud”. International Review of Victimology 21(2), pp. 187-204.
[36] Fenge, L.A. and Lee, S. 2018. Understanding the Risks of Financial Scams as Part of Elder Abuse Prevention. British Journal of Social Work (48), pp. 906-923.
[37] Age UK. 2017. Older People, Fraud and Scams. Available at: rb_oct17_scams_party_conference_paper_nocrops.pdf (ageuk.org.uk)