British expat retirees losing millions via rogue offshore IFAs

Pensions scams by rogue IFAs are still wrecking expat lives in Spain and many other expat retiree destinations.

The latest scandal involves the mis-selling of QROPs pension transfers and has resulted in those who’ve lost all their life savings now being chased by the UK taxman, even although they weren’t aware they were breaking the rules. The IFAs concerned grabbed massive commissions and bypassed UK rules by working overseas, even although HMRC had allowed listing of the scammers on its website.

One former British expat is now being chased by HMRC after having lost her entire pension pot of €400,000 to a scammer operating in Portugal’s Algarve region. Forced to sell her villa and return to the UK, she’s now living out of a mobile home outside Bournemouth. She’s financially ruined and is now being chased by the taxman for €70,000 tax, owed because she’d had to return to the UK inside the permissible 5-year double tax treaty and had withdrawn amounts without understanding she’d been scammed. She’s just one of many who believed an IFA listing on the regulator’s website guaranteed honest service.

According to the Daily Mail, many thousands of British retirees have lost a total of around 12 billion euros to pension scammers, with the majority being forced unwittingly into poverty and arrears of tax. The now defunct company, Continental Wealth Management, netted huge commissions on overseas transfers of QROPs, neglecting to inform their clients about a rule which stated those returning to the UK before the end of a five year period would incur swingeing tax bills. The regulator refuses to recognise victims of such scams, even although their website states scammers’ businesses as legal and registered, thus encouraging their use by novice investors.

Even before the introduction of QROPS and not only in European retirement havens, expats have been losing their entire pension savings to IFA scammers using similar modus operandi including registration with HMRC whilst working illegally in expat hubs worldwide. As a result, in 2013, 1,200 expats located all over Asia were hit by the collapse of Australian fully licensed investment management company LMIM.

The amount lost was around AUS$ 750 million and the modus operandum was similar, starting with blatant mis-selling to inexperienced expat retirees and ending with a massive push to sell more of the investment within two to three weeks of the collapse. By this time commissions to IFAs were huge, and their activities were backed up by offshore insurers such as Friends Provident International and others based in the Isle of Man.

To date and in spite of several expat campaigns, no restitution of the millions lost has taken place and the scammers involved are long gone, having fled once their activities became known. The offshore insurers placed all the blame on the victims, ignoring the fact that most of the IFAs were illegally working in destinations including Hong Kong, Singapore and Thailand. Those affected by the CWM collapse are seeking reparation through the courts, but those hit by LMIM are still waiting in poverty, with no fair or just resolution in the pipeline.