Where are Australian Qrops going?

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Where are Australian Qrops going?
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What caused HM Revenue and Customs to introduce the pension age test that has devastated Australian Qrops?

If it ain’t broke why fix it? So HMRC have fixed it by removing non-compliant schemes with the Pension Age Test. I cannot see Australia having its blacklisted tag removed for a long time, if ever, unless they have a special scheme for over 55’s but that is not necessarily answer that is best for over 55’s.

Let’s face with a lot of bad advice coming out of Australia which was anyway invariably execution anything is going to happen and it did. Final salary transfers were taking place through no advice and with a regime so loose as that HMRC did the financial advice profession and the consumer a big favour by pulling 1600 plus Aussie schemes.

What do you mean?

Seeing what Australian schemes have done beggars belief, buying residential property and using pension schemes as a bank account to lend money to mates. If you can’t do it in UK, you can’t do it overseas. And Aussie schemes were letting it happen.

I mean Australian schemes may be run well in a tight compliance regime for their domestic arrangements but as far as Qrops are concerned it was the ‘Wild West Down Under’.

Australian schemes may be run well in a tight compliance regime...but as far as Qrops are concerned it was the ‘Wild West Down Under’.

Surely there were controls in place?

You would think so but when I went into two banks in Melbourne and two advisers in Western Australia I was told I had to transfer and not to listen to UK advisers – they didn’t know what was best for an Australian resident.

When I asked for advice, they said they didn’t give advice. All the Australian advisers finally confessed that it was my decision to move the fund and that they would do the investment. It’s all execution-only advice.

Sometimes I think the pension age test was the ultimate control, the control to end controls.

Do you think the UK regulators have problems on their hands?

Yes, I don’t think they have really got to grips with this. I have heard it said that they seem to think an Australian adviser knows more than a UK adviser about whether to transfer a pension to Australia (in the past).

Well they don’t because all they want is funds under management, we have seen so many problems and we have had to rescue so many people. And these rescues and those that couldn’t be rescued will soon be reaching the Australia powers to be.

The UK regulators need to look at what the overseas advisers are doing when we in the UK are doing our best to stop train crashes.

Did you say that Australian advisers don’t do transfer analysis for a UK final salary transfer?

Yes, most don’t know what you are talking about when you mention an analysis. A whole industry has grown up around flogging form filling to transfer a pension they don’t even look at whether it’s best to keep the UK scheme!

So do you think we have seen the end of Australia as a Qrops Option?

It wouldn’t surprise me – it might be a month, maybe this year, maybe next year when they may return, maybe never – that is unless the over 55 option materialises. One thing is for sure Australian advice has changed for ever, its where it should have been, i.e. fully advised regardless of whether there are Qrops or not.

Geraint Davies is managing director of Montfort International.