The Financial Conduct Authority has issued a stern warning after discovering some offshore “advisors” are targeting potential clients and advising them to transfer their UK pension to a SIPP or a QROPS.
The Authority is aware of overseas financial firms advising potential clients to transfer their UK pensions and expressed extreme alarm at what was happening because it meant that consumers could end up paying excessive and unnecessary charges and possibly investing in unregulated underlying investments.
Very often the financial firm providing the advice is not regulated by the Financial Conduct Authority of the United Kingdom and the underlying investments tend to be unregulated, illiquid and high risk.
The Financial Conduct Authority has already issued a warning over the high level of scams perpetrated by offshore advisors relating to defined benefit transfers.
Sometimes advisors work in tandem. The UK authorised advice firm provides the pension transfer advice and an associated company based overseas provides advice on the choice of wrapper and the underlying investments.
In the above circumstances the FCA would have no jurisdiction as the advice provided by the company based overseas is outside their jurisdiction. However, it is still possible that the Authority might be able to do something if the advice provided by the advisor who is based in the UK breaches their rules by perhaps not investigating the intended investments within the new pension.