“Given the complexity of final salary pension transfers and the lack of qualifications and experience of many non-UK advisers promoting pension transfers, expats would not get the protection they need by scrapping this safeguard,” he said.
Lean added that a better solution would be to have UK advisers working in conjunction with overseas advisers so that clients can still have a level of protection.
“While the current system is not ideal, with many UK advisers not being used to dealing with expat clients and local tax issues, a UK and non-UK adviser working together surely provides better protection than relying on local regulators to check that the local adviser is suitably qualified.
“Particularly as non-UK regulators are not in a position to regulate the quality of the actual transfer advice from the UK to third country pensions,” he said.
‘Watering down’ safeguards
Meanwhile, London-headquartered IFA firm Strabens Hall, said it was “distressing to see that there may be a significant watering down of these [advice safeguards]” for expats only a year after the pension freedoms came into effect.
“We are concerned this may the first of a series of changes that could have negative consequences for pension members.
“The rules are not in place to prevent members of UK pension schemes from transferring if they wish to; they are designed to provide important checks and balances for people who are contemplating taking an irreversible course of action and who may not be fully aware of the implications or the potential value of the benefits they are considering giving up,” said the firm in a statement.
The firm, which also has an office in Hong Kong, added that it is concerned that British expats may be “taken advantage of” by advisers in countries where financial service regulation is less stringent than the UK.
“Through both our London and Hong Kong offices we have seen cases where non-UK clients have been advised to move pensions into offshore arrangements that will provide them with no immediate tangible benefits, yet the initial costs of the exercise can be approaching 12% of the value of the transfer value,” it said.
On Monday, Strabens Hall warned against using recognised overseas pension schemes (Rops), arguing that the high charges incurred with using the product can often outweigh the tax advantages they offer.
Nigel Green
However, Nigel Green, chief executive of deVere Group, believes the UK should scrap the adviser requirement.
“The current rule has many negative unintended consequences and we will be urging the government to adapt the transfer process and allow local advice to be given for Rops.”
“In addition, under this system, only one financial adviser would be required, which would be less costly and less time consuming for the member,” he said.
