“This has led to people with UK pensions being targeted in a number of ways, including cold calling, with a view to persuading them to transfer their pensions into a Sipp or Rops which may – often unwittingly due to the sophisticated nature of such arrangements – permit investments into unsuitable and high risk products,” he told IA.
“These often pay high commission or fees to the person or company who recommended the transfer and underlying investment.”
Last week, HM Revenue & Customs (HMRC) released figures showing that over £9.2bn (€10.7bn, $11.5bn) has been withdrawn from pensions since the freedoms came into effect.
Declining Rops demand
The FCA warning comes amid the UK government’s overhaul of foreign pensions, announced in the Autumn statement last November, designed to change the way Rops are taxed and regulated.
White believes increasing regulatory oversight of such products coupled with Brexit may lead to a drop in the use of Rops.
“A combination of these factors, other regulatory changes both at home and overseas and the possibility of further changes once the UK is out of the European Union will lead to a reduction in the number of Rops being sold in the medium to long term,” he said.
White was keen to add that Rops should only be used when appropriate, predicting that the reduction in the size of Rops market would also be driven by improving standards in the advice given.
