Financial Conduct Authority  

FCA warns on overseas advisers targeting Sipp transfers

FCA warns on overseas advisers targeting Sipp transfers

The Financial Conduct Authority has sounded alarm bells after learning some overseas advisers are targeting consumers and recommending them to switch their UK pension into an international self-invested personal pension.

The regulator said it was aware of overseas advice firms advising expatriates to transfer or switch their UK pensions, and warned it was concerned consumers would be exposed to high and unnecessary charges as a result.

The City watchdog said anyone who was approached by an adviser in these circumstances should ensure they understand all the possible charges and any exit penalties which might apply. 

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The FCA said: "These queries typically relate to the charges being paid in these overall arrangements.

"Overseas advisory firms often invest consumers’ pension funds through an offshore investment bond within an international Sipp.

"We are concerned that consumers who invest in this way may be exposed to high or unnecessary charges.

"We are also concerned that the tax benefits of investing through an offshore investment bond are largely redundant to someone investing in a UK personal pension scheme."

Scam concerns 

Earlier this year the regulator raised concerns over the level of scams being carried out on defined benefit transfers, especially by overseas advisers.

Some firms are currently operating a two-adviser model whereby the UK-based firm gives the transfer advice, and an overseas firm gives advice on where the funds may be invested if a transfer proceeds.

Although the UK firm advises the saver to stay in the DB scheme, the individual commonly proceeds to transfer into an overseas Sipp, advised by the overseas firm, and then goes on to invest in illiquid, high risk assets.

The FCA has previously warned it was often powerless in these situations as the advice provided by the overseas firm falls outside its regulatory perimeter. 

However, the FCA may be able to act on the advice provided by the UK adviser if it breaches FCA rules, for example if the adviser did not look into the intended investments.

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