Earlier this week, the FCA ordered Holborn Assets Ltd to immediately cease all pension transfer business, especially transfers introduced by overseas advisers pending a section 55L investigation, where a ‘skilled person’ will review the Dubai-based IFA’s overseas pensions transfers.
The order followed a similar sanction by the FCA against deVere UK in February to “immediately cease” providing third party companies with transfer value analysis (TVAS) reports which are required for defined benefit (DB) pensions transfers over £30,000 ($37,411, €34,637).
Meanwhile, the UK government’s shock decision to impose a 25% charge on transfers to foreign pension schemes, announced in the Spring Budget earlier this month, is seen as a co-ordinated effort alongside the FCA to stem the flow of pensions money moving abroad.
“I predict there will be more [firms facing action from the FCA], particularly if DB pension transfers were a considerable element of the business mix and where the firm was FCA-regulated and conducting these reports,” Searle told International Adviser.
He believes the FCA crackdown, which in January prompted the regulator to take the unusual step of issuing a stark warning to firms advising on domestic and international pension transfers, could create a “sweeping change to the international IFA landscape”.
In line with wider speculation, Searle claims that the FCA is currently considering a thematic review into DB transfer advice, which would include international pensions. The regulator has previously declined to comment when pressed by IA.
Regulatory arbitrage
Sam Instone, chief executive of rival Dubai-based advisory firm AES International, agrees with Searle that more firms are still in the FCA firing line over their conduct in the overseas pensions space.
“There are still more non-UK firms who have set up businesses in the UK with the sole purpose of facilitating the transfer of pensions to their parent company.
“That’s what they are all in trouble for doing.
“Over the last few years, we’ve had international businesses, such as Dubai-based businesses or St Kitts and Nevis-based businesses, coming into the UK to facilitate the breaking of rules.
“They’ve set up UK businesses so they could pass pensions to their Dubai-based companies and then do bad things with those pensions,” he told IA.
Instone added that the FCA is also interested in firms that have been using “regulatory arbitrage which is probably what’s been happening in these cases”.
“The FCA is looking at all these dodgy firms,” he said but disputed Searle’s claims of an FCA thematic review.
