Cold calling consultation: unintended or intended consequences

Published 5 September 2023

On 2^nd August 2023, the UK Government launched a consultation "Ban on cold calling for consumer financial services and products".  The consultation forms part of the Fraud Strategy announced in May 2023 under which the UK Government proposes to extend the current pensions cold calling ban to all consumer financial services and products.

The government has stated a belief that banning cold calling for financial services and products will help block fraud attempts before they can cause harm and that the public "know that no legitimate firm would cold call them to market financial services or products, and should feel empowered to terminate and report these calls".

The consultation focusses on "how best to design and implement this ban to prevent scam calls from reaching the public, while allowing legitimate and beneficial communications from businesses to continue" and calls for information and data to allow the impact on businesses to be more rigorously assessed.

It is evident from the way in which the consultation is being undertaken that a ban on cold calling in some form is a fait accompli and that it is not a question of if but how it will be implemented.

The intention, as stated in the consultation, is that the products and services intended to fall into scope will include, but will not be limited to:

• Any product or service of a banking or payment nature, including electronic money and cryptoassets
• Mortgages and insurance, as well as white goods warranties and protection plans
• Investments, including tangible items where these are marketed in the manner of an investment, for example, whiskey and wine
• Credit and debt, including individual voluntary arrangements

Given the non-exclusive nature of these examples and the potentially extremely wide ambit of "credit and debt" services (in particular, going well beyond just those services that are regulated by the FCA) there is clear potential for a significant impact on the motor claims market, particularly in relation to credit hire, and the potential to impact both insurers and those providing claimant-related services.  The consultation states that:

"Currently, the government does not plan to exclude any financial services or products from this ban and would only make exceptions where there is a strong case that the consumer benefits outweigh the risks of consumer harm that could arise from an exclusion."

Whether the capture of cold calling in the claims arena is an intended or unintended consequence of the proposed legislation is unclear but the potential for it to do so is obvious.  One of the matters on which the consultation seeks view is whether there should be an exception for FCA and PRA authorised businesses, when there is an "established existing client relationship" between the business and the receiver of the call "such that the recipient envisages receiving cold calls".  The consultation notes however the absence of any such exemption in the ban that currently applies to cold calling for claims management services.

The consultation comprises 19 questions together with a call for empirical evidence "on the potential benefits and unintended effects associated with the proposed ban" and insurers will need to carefully consider the ways in which the proposed ban might affect them.

A full note on the wider implications can be found here.

To discuss the consultation and the potential effects that it might have, clients should contact Emma Fuller or Jo Folan on the details below.