Scams and mis-selling
Some of the respondents expressed concern that relaxing the advice requirement would introduce an increase risk of scams of mis-selling.
“Transferring outside of the UK regulated environment is a higher risk transaction than a transfer to a registered pension scheme, so the existence of the advice requirement as a consumer protection measure is particularly important” – Investment and Life Assurance Group.
AJ Bell’s Selby added: “We know a significant number of pension scams involve moving money to vehicles in foreign jurisdictions which often lack the protections available in the UK.
“Fraudsters would inevitably have seized on any scaling back of the advice requirement to target people with defined benefit pensions and valuable guaranteed annuity rates (Gars).”
He continued: “While HM Revenue & Customs’ stance will make it more costly and time-consuming for people to transfer larger guaranteed pensions into overseas schemes, this seems a small price to pay to ensure members are protected.
“Indeed, with the ongoing attention being placed by the FCA on defined benefit transfer advice, it would have been odd for HMRC to water down the advice requirement for people transferring to a qualifying recognised overseas pension scheme (Qrops),” Selby said.
