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Consultation launched to ban cold calls for all financial products and services

The UK government has launched a consultation with the aim of prohibiting cold calls relating to all financial products and services, including insurance, as part of its strategy to tackle fraud.
The implementation of a ban on cold calls would help to:
- block fraud attempts before they can cause financial harm
- Inform consumers that no legitimate firms would be cold calling them to market financial services or products in an unsolicited manner
- empower consumers to terminate and report any scam calls that they receive
Legitimate firms would also receive a clear set of restrictions to follow when marketing financial products and services to potential consumers, with enforcement action being taken against firms who continue to engage in harmful cold calling practices.
The consultation paper published on 2 August looks at how best to design and implement the ban to prevent scam calls whilst allowing legitimate and beneficial communications from businesses to continue. Financial products and services that fall within the scope include:
- Any product or service of a banking or payment nature, including electronic money and crypto assets
- 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
The closing date for the consultation will end on 27 September 2023.
View the consultation paper here.
What is cold calling?
Cold calling is the practice of contacting a potential client or customer to sell a product or service. Often, cold calls involve the receiver not having any previous contact with the caller or business they are representing,
The FCA defines cold calling as:
“a financial promotion made in the course of a personal visit, telephone conversation or other interactive dialogue:
a) which:
(i)was not initiated by the recipient of the financial promotion; and
(ii) does not take place in response to an express request from the recipient of the financial promotion; or
(b) in relation to which it was not clear from all the circumstances when the call, visit or dialogue was initiated or requested, that during the course of the call, visit or dialogue, communications would be made concerning the kind of controlled activities and controlled investments to which the communications in fact made relate.”
Whilst cold calling can sometimes be a useful marketing tool, it carries a bad reputation. Criminals typically exploit telecommunication networks and services to commit fraud, including the use of cold calls to scam individuals into parting with their finances.
Fraud reportedly costs the UK nearly £7 billion a year. Investment fraud has also increased significantly in recent years, according to statistics from Action Fraud, the national reporting service for fraud and cybercrime. In 2022-23, the number of reports for investment fraud came to 23,900, with a total reported loss of approximately £750 million This includes the loss of the victim’s finances, the cost of supporting victims, and the cost of recovery, investigation and prosecution of fraudsters.
It's not just financial loss that affects victims of cold call scams. Emotional or psychological harm can also affect victims, and in some cases can also have a severe impact on physical and mental health. Victims of cold call scams may also cause them to lose trust in financial services in general, even when a legitimate business offers them a product or service that will benefit them.
Already less than half of UK adults have confidence in the financial services industry. Having a ban on cold calling practices would be an additional boost for firms to regain consumer trust in the market, which would also work alongside practices already being implemented under the Consumer Duty.