Due to the obvious paybacks, many individuals transfer their pension into a QROPS when leaving the UK. Yet with the myriad of issues to deliberate on – from DTAs to their financial goals – it is imperative they seek advice from an international IFA.
Because of the market’s intricacy, UK-based and other non-international IFAs are often outsourcing QROPS advice. The trend was first reported in a study led by Technical Connection, which shows advisors are reluctant to dispense advice on QROPS due to lack of knowledge.
Yet sometimes, in a dramatically worse turn of events, IFAs are nevertheless giving advice on these matters without performing the necessary due diligence, or the relative experience.
Some issues begin because of the lack of stability to the guidelines laid out by HMRC. The changes affect all 4,000 QROPS in around 100 jurisdictions – meaning it can be difficult to keep abreast of the changes for non-internationals. Combining this with a lack of regulation from the FCA, and it’s not hard to understand why IFAs call pensions and QROPS the advice “black hole”.
International Advice
When clients connect with non-international advisors they limit their options to the restricted countries their IFA is aware of. Take for example the Guernsey clampdown in 2012. At the time of the island’s drop from the QROPS list, over 90% of the QROPS providers planned to switch their offering to Malta – i.e. 90% did not already have international presence and had therefore only offered this unstable QROPS destination.
Many IFAs have mistakenly advised QROPS like this, which could have meant losing 55% of their client’s fund as unauthorised charges.
This has now caused a shift in the market – with clients being counselled to only take information from international IFAs – and therefore benefit from ‘cross-border’ advice undertaken with all the necessary due diligence.
Similarly, ‘marrying up’ a pension holder’s jurisdiction and the QROPS options available takes substantial experience. Yet with the correct IFA, clients do not only transfer to the correct QROPS; they can potentially benefit with a ‘cross-jurisdictional’ scheme and relocate their fund at a later time.
Best Advice
As a person’s principal asset, pension advice needs to be correct. Whilst QROPS are now a key offering from UK finance advisors, it’s only when they are equal to international advisors that clients can get the advice they need. Until this time, advice needs to be pursued from international IFAs.
Contact us today to find out more.
About John Cassidy
