Pension scammers hide behind QROPS verification

Pension savers are calling for HMRC to clamp down on scammers that are using recognition under HMRC’s Qualifying Recognised Overseas Pension Scheme (QROPS) to target nest eggs

Pensions can be moved abroad to companies on the official list of QROPS - stamping the schemes with HMRC approval.

An HMRC spokesperson told Accountancy Daily: ‘HMRC has done much to combat pension scams. In particular, with overseas pension schemes, we introduced the Pension Age Test in 2015, and the Overseas Transfer Charge in 2017 - this led to the removal of over 600 overseas schemes (ROPS) in 2017, further safeguarding taxpayers and their savings. 

‘It is the responsibility of pension scheme administrators for conducting due diligence - for example checking if tax will be owed - before transferring people's savings overseas. We encourage individuals to seek professional advice before transferring their pensions.

‘We will continue to come down hard on scammers who we identify, working closely with the Pensions Regulator and Financial Conduct Authority in a cross-agency approach.’

This follows a Daily Mail investigation this week that exposed how savers lost up to £10bn in UK schemes registered with HMRC and the Pensions Regulator.

One company caught using QROPS in alleged scams was Continental Wealth Management, the Costa Blanca based company is facing £2.5m in legal action.

Once the money was transferred abroad, scammers then raided the funds for commissions, then once savers tried to withdraw what remained of their money were charges with huge exit fees.

In response to the cross-border pension scams, a spokesperson for The Pensions Regulator told Accountancy Daily: ‘Our primary concern is that defined benefit scheme members and their advisers have all the information they need to make an informed decision about what is in the members’ best interests. We are working closely with the FCA and other relevant industry bodies to achieve this.

‘The provision of accurate and timely information from trustees to members and their advisers, and the use of independent regulated financial advice, will enable members to make informed decisions that suit their personal aims and circumstances, working with their regulated financial adviser to do so.

‘Our guidance makes clear that trustees must check that members with a cash equivalent transfer value (CETV) of above £30,000 have obtained appropriate independent advice before transferring or converting safeguarded benefits to defined contribution benefits.’

Taking positive steps, the UK government had tightened rules on UK-based pension advisers by banning cold calling. Therefore, scammers have moved abroad to jurisdictions where there are less controls so they can continue their efforts to dupe savers.

Research by the Money Advice Service suggests that there could be as many as eight scam calls every second, the equivalent of 250m calls annually, while figures from the Financial Conduct Authority (FCA) indicate pension scammers stole on average £91,000 per victim in 2018.

The ban prohibits cold-calling in relation to pensions, except where the caller is authorised by the FCA, or is the trustee or manager of an occupational or personal pension scheme, and the recipient of the call consents to calls, or has an existing relationship with the caller.

After making the QROPS list, each scheme is given a certificate to show their recognised status, the validity of which can be verified by contacting HMRC directly.

Before making a transfer overseas, a UK-registered pension scheme should verify that the QROPS status is valid by asking to see the certificate, then looking online and/or calling HMRC.

HMRC added: ‘We empathise with anyone who believes they have been misled about their pension investments and encourage them to report scams to Action Fraud on 0300 123 2040.' 

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