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FCA Warns UK Consumers on Overseas Advisors Targeting SIPP Transfers

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Instances of SIPP mis-selling have been rising in the UK in the last few years. The media has also regularly highlighted specific cases, which has helped to make the public more aware of the problem.

However, the newspapers have largely focused on UK-based financial firms. There’s actually another growing issue for customers to be aware of – mis-sold SIPPs from overseas advisors.

Here’s everything you need to know, plus some advice about what to do if you’ve been mis-sold to.

Financial advisors operating abroad – what’s the problem?

Overseas advisors have been targeting expat investors, encouraging them to transfer their existing pensions into an international SIPP.

While some of these products are beneficial to investors, others come with hidden fees and charges, which can be high. Additionally, the FCA found that customers weren’t being made aware of expensive exit penalties, should they want to change their pension product in the future.

The FCA explained that these hidden costs “typically relate to the charges being paid in these overall arrangements.” They also emphasised that the tax benefits associated with investing via an offshore investment bond were actually not that beneficial to someone investing in a UK SIPP product.

Scamming – a growing issue

Unfortunately, cases of scamming are on the rise too. This problem has been particularly prevalent with pension transfers carried out by overseas advisors. That’s why it’s vital to ensure that the firm you’re dealing with is reputable.

In the UK, this is relatively easy - you can visit the FCA website to check if the company is authorised or not. However, this only applies to UK-based companies. If you’re investing with an overseas firm, try to find out if they’re authorised in the country that they’re situated in.

The two-advisor approach

Another issue is the ‘two-advisor’ approach. To start with, the client is given advice from a UK-based firm, then, if they decide to go ahead with the transfer, an overseas company provides advice on where their pension can be invested.

This means that the client’s pension pot is often invested into high-risk assets – and the FCA is powerless to put a stop to this practice, as it’s outside their current regulatory remit.

This highlights why it’s so important to find out exactly who is involved in your pension transfer, and what the implications are if the SIPP underperforms in the future.

Have you been mis-sold your SIPP?

If you’ve transferred your pension via an overseas advisor and have lost funds as a result – don’t panic! We may be able to help, and win you the compensation that you deserve. Firstly, you’ll need to ascertain if you’ve been mis-sold to.

Do any of the following sound familiar?

  • You were pressurised into transferring your pension
  • The new pension product sounded too good to be true
  • The risks weren’t fully explained to you
  • You didn’t receive enough information about the pension product
  • Your attitude to risk wasn’t taken into account

If you’ve experienced any of the above, get in touch with our team today by calling 0808 163 1659 today or email enquiries@goodwinbarrett.co.uk.


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