The Financial Conduct Authority has been told to take action by an adviser claiming he comes across one or two cases of unsuitable overseas pension transfers every week.
Geraint Davies, managing director of overseas pension specialist Montfort International, said he had been in contact with the FCA to discuss the issue.
He predicted the regulator would be visiting firms to investigate.
Mr Davies' comments come after the FCA issued a warning last week addressed to UK advisers involved in pension transfers to overseas schemes.
The warning stated they should take into account the specific receiving scheme, including the likely expected returns of the assets and all the costs and charges, when deciding suitability.
Mr Davies said he had seen evidence of overseas advisers with very high fees, with some charging up to 10 per cent in initial charges.
He said: “If an overseas adviser working in a vacuum of regulation is taking 10 per cent in initial charges then you have got to start to question who is acting in whose best interests.
“We have come across about 100 cases where we wouldn’t have recommended the transfer. I usually hear about one or two a week.
“We came across one case where the adviser was signing off 50 transfers a week, which you cannot do. It is impossible.”
Anyone transferring out of a defined benefit scheme to the value of £30,000 or more is required to take regulated financial advice before a transfer takes place.
During the financial year 2015 to 2016 there were 13,700 transfers into a qualifying recognised overseas pension scheme, with a total value of £1.5bn, according to figures from HMRC.
While this is a significant increase on the 2,500 transfers which took place in 2006 to 2007, it is a reduction on the number of transfers in 2014 to 2015, when 20,100 took place.
Stuart Ritchie, a chartered financial planner at AES International, said: “We regularly come across people who have been deceived into transferring their UK pension to very high risk funds, which pay their adviser high indemnity commission, and so we are not at all surprised (with) the FCA's issuing of an alert.
“Whilst the main risk for those who do transfer their benefits is now less likely to be the scheme and investments they transfer their defined benefit scheme into – as that scheme has to pass through the attentions of an FCA-authorised firm - there can still remain problems."
Mr Ritchie said the main issue is their local adviser overseas will come back to them later with some apparently attractive but valueless if plausible get-rich-quick fund.
He said he had seen 100 cases of people advised to transfer based on unsuitable advice in the past 15 months - though this could be because the transfer was suitable but the underlying investments were not.
“No mention will be made, of course, of the very high commissions and fees the scheme will likely carry.”
Nigel Green, chief executive of DeVere, said: "DeVere Group uses a panel of FCA-regulated IFAs to write reports for our clients. Like most professional service providers in the UK, the panel of experts that we use all charge a fee in monetary terms, not as a percentage of the transfer.
"This allows us to present the client with a solid, independent report in a cost effective manner. Of course, the fees are fully disclosed to the client in advance. Clients understand that the value of these reports and are, typically, happy to pay the fee.
"However, there is also an argument that the government should adapt the transfer process and allow local advice to be given for QROPS. Proponents of this insist that a local adviser would be typically better placed to advise on the regulatory conditions, tax implications and the available investment opportunities.
"In addition, should the rule be adapted only one financial adviser would be required, which would be less costly and less time consuming for the client."
A spokesman for the FCA declined to comment on whether the regulator would take action beyond issuing last week's warning.
damian.fantato@ft.com
