Tag: QROPS

Ten Essential Standards For Pension Advice
Ten Essential Standards For Pension Advice:

The ongoing war against pension scammers continues with no sign that the end is near. The authorities stand idly by – facilitating mis-selling and outright fraud.

HMRC happily registers pension scam after scam after scam (followed by tax demands). Prosecutions are few and far between.

The only conclusive way to stop scammers is to ensure there are no victims for them to scam. AND the only way to do this is to educate consumers and drum the TEN STANDARDS into them.

PENSION SCAMMERS MUST BE STOPPED!

Ten Essential Standards For Pension Advice:

Do you know what a pension scammer looks like? The unfortunate answer is, he looks like any other Tom, Dick or Harry (or James, Stephen or Darren) walking down the street. Not only is he good at disguises, he also has the gift of the gab and he will have you convinced that the pension transfer he is offering you will pave the rest of your life with gold. In reality though, the gold will be short lived (or non-existent), and some or all of your fund will probably go poof! (along with the adviser).

Much as a master illusionist takes your breath away with his magic, a master scammer takes your money away with his silver tongue. You will be left wondering just how this smart-looking, sleek-talking ‘adviser’ managed to leave your pension – and probably your life – in tatters.

We have compiled a list of ten standards that EVERY firm offering pension advice should adhere to. Every qualified adviser working for an advisory firm should also be able to meet all of these standards. On Facebook recently, one reader stated: “Why would anyone respond to an unsolicited offer to manage their money from a complete stranger?” The answer is, “I don’t know, but they do!“. So, get to know a financial adviser long before you let them anywhere near your finances.

In the case of Capita Oak, for example, we saw many targeted victims who were struggling financially. So, the offer of a lump sum release and the opportunity of an investment that promised “guaranteed returns” was music to their ears.

Many of the victims didn’t stop to think; didn’t pause to ask the right questions; or do any research to make sure the pension offer came from a viable, credible, regulated firm. The victims just said “yes” as they thought the transfer would make life easier.

For example, with the awful benefit of hindsight – six years on – the Capita Oak victims are grappling with tax demands from HMRC and the possibility that the investment they are trapped in will go into liquidation. These people all wish they had stopped and thought before going ahead.

Sadly, the Capita Oak members who were defrauded by a bunch of scammers, (many of which are under investigation by the Serious Fraud Office) such as XXXX, Stuart Chapman-Clarke and Stephen Ward, are not alone. Thousands of other victims of both UK-based and offshore scams and mis-selling are facing similar regrets: these include victims of scams such as Evergreen New Zealand QROPS; Fast Pensions, Trafalgar Multi Asset Fund/STM Fidecs; Blackmore Global Fund; and Continental Wealth Management.

Mastermind serial scammer Stephen Ward has orchestrated a whole array of different scams over the last nine years. One of the biggest ones was Continental Wealth Management – a 1,000-victim scam. Ward was once a fully qualified and registered adviser and a pension trustee. He has destroyed dozens of pensions funds and thousands of victims’ lives. Yet he has never been prosecuted or forced to pay back even one penny of his victims’ losses. Only at the end of 2018 was he finally banned from being a pension trustee.

Most of the known scams used cold-calling techniques to reel in their victims. Whilst we saw a cold-calling ban on pension sales in 2019, we have already had reports that sneaky firms have changed their scripts to avoid fines. AND we are now seeing scammers focus their targets back onto expats. Which makes us worry there will be more QROPS disasters in the pipeline from now on.

Just a few minutes of research – as well as knowing the right questions to ask and understanding what standards an adviser and firm should adhere to – could have prevented past victims from losing so much of their precious pension pots. We can’t change what happened in the past – other than to take action against the scammers and negligent advisers – but we can help consumers understand what they should be looking for in an adviser:

STANDARDS ACCREDITATION CHECKLIST FOR FINANCIAL ADVISERS:
1. Proof of regulation for all services provided by the firm and individual advisers in the jurisdiction where advice is given
2. Evidence of appropriate qualifications and CPD for all advisers
3. Professional Indemnity Insurance
4. Details of how fact finds are carried out, and how clients’ risk profiles are determined and adhered to
5. Details of the firm’s compliance procedures – assuring clients of the highest possible standards
6. Clear and consistent explanation and justification of the use of insurance bonds for pensions and investments
7. Clear policy on structured notes, UCIS and in-house funds, non-standard assets and commission-paying investments
8. Full disclosure of all fees, charges and commissions on all products and services at time of sale, in writing
9. Account of how clients are updated on fund/portfolio performance
10. Evidence of customer complaints made, rejected or upheld and redress paid
If the firm you are thinking about using for your pension transfer do not adhere to all of these standards, find one that does. Your pension pot is your life savings – so don’t entrust it to any old unregulated firm or dishonest scammer. Remember, thousands of victims have already failed to ask the above ten questions – and will regret it for the rest of their lives.
March 11, 2019
Hidden charges that destroy your pension funds
When we buy certain products, they have a warning on them. Cigarette packets, for instance, state that smoking is bad for your health. The wrappers show hideous images of what might happen to you if you use tobacco.

However, when it comes to investments, the ‘advisers’ selling dangerous investments are able to disguise the risks and costs. Offshore, there seems to be no effective code of conduct, or regulation as to what they must disclose and what they can conceal.

Last week the FCA slammed asset managers and retail investment firms over hidden fund charges.

When selling their investments, these firms are really good at omitting details of the full charges that will apply – not only initially – but on an ongoing annual basis as well. These hidden charges put your investment in danger.

The FCA has stated:

“In one case it found an asset manager had omitted a 4 per cent a year transaction cost from the UCITS Key Investor Information Document (KIID).”

In so many pension scams, we hear that the victims were sold a ‘free pension review’; they were not told about the transfer costs; that they were not told about annual fees either. In many cases, the transfer costs and fees work out to be considerably higher than if they had paid a proper fee for the review in the first place. These hidden costs put a huge strain on the fund and sometimes victims can lose up to 25% of their fund to hidden charges.

What worries us most is the lack of regulatory concern or control in respect of expensive and risky investment products. You can’t buy cigarettes without a stern health warning. The same goes for alcohol: bottles and cans clearly state how many units are in the container, and how many units men and women can safely drink per day. They also state that alcohol should not be consumed by pregnant women.

Alcohol companies manage to fit all this info about the dangers of drinking on a tiny label. And this poses the essential question as to why financial advisory firms are able to sell risky investments again and again – omitting clear warnings about the dangerous aspects of them.

Also highlighted in an article by Corporate Adviser:

“The FCA reserved its fiercest criticism for asset managers, saying it found instances where asset manager fact sheets or websites did not mention costs. When they did, they often gave the ongoing charge figure, which omitted transaction costs, performance fees and borrowing charges which are shown in the Key Information Document (KID). In one example, total charges in the PRIIPs KID equated to around 3 per cent per annum – but the only costs given in the fact sheet was the 1.2 per cent annual management charge (AMC).”

This is not news to us at Pension Life. It is something we have been writing about for sometime – and we have a great deal of evidence that hidden, excessive charges are a terrible blight on the face of financial services internationally. It is indeed excellent news that the FCA has finally highlighted the dangers of such hidden charges, but now we need to make sure these dangers are highlighted to the public. CLEARLY AND VISIBLY.

A prime example of advisers and hidden charges is the dastardly duo: Phillip Nunn and Patrick McCreesh. This pair of scammers received £ millions promoting the Capita Oak, Thurlstone Loans, Henley Retirement Benefits Scheme and Berkeley Burke SIPPS scams – leaving 1,200 victims facing poverty in retirement. With that disaster comfortably behind them, they then launched the £40 million Blackmore Global scam and now their network of scammers are promoting the Blackmore Bond which pays a 20% introduction commission to the introducers.

You can’t buy a gun without going to a registered shop and having a licence. (Although, I guess on the black market you can). If you buy a gun on the black market, it is going to be ‘hot’. The person you buy it from is going to be dodgy and it certainly won’t come with the correct paperwork.

So if you are a normal, law-abiding citizen (and cautious investor), you would want a legitimate investment which fits your risk profile – and full paperwork disclosing ALL the charges. Make sure you pick the right adviser who will give you evidence of all these essential details.

Dodgy advisers are still getting away with selling ‘hot’ investments: funds that are clearly toxic and dangerous to your pension fund. These advisers manage to do this very successfully by wrapping them in a fluffy cover and selling them with an array of unrealistic promises of high returns and alleged capital protection to reel the victims in.

When considering a pension transfer, we urge you to familiarise yourself with our ten standards. Your adviser ought to adhere to these standards anyway – and if he doesn’t then walk away. Number eight covers what we have talked about in this blog: CHARGES.

Your adviser MUST GIVE YOU: Full disclosure of fees, charges and commissions on all products and services in writing, before you commit. So before you sign anything regarding a pension transfer and subsequent investment, please ensure you know exactly what charges will be applied to your fund: before, during AND after. It is also imperative to know if there is a lock-in period and early exit penalty and to make sure you are comfortable with that.

Excessive and concealed fees can ruin a once healthy and happy pension fund – just like smoking can ruin your lungs and drinking can ruin your liver. Hidden charges can put your funds in danger and ruin your retirement savings beyond repair.

Here is a list of our ten standards.

STANDARDS ACCREDITATION CHECKLIST FOR FINANCIAL ADVISERS:
1. Proof of regulation for all services provided by the firm and individual advisers in the jurisdiction(s) where advice is given and the clients are based.
2. Verifiable evidence of appropriate, registered qualifications and CPD for all advisers. (Where there are insufficient qualifications, there must be clear evidence of plans and preparation to achieve required goals within a reasonable, stated time frame).
3. Professional Indemnity Insurance
4. Details of how fact finds are carried out, how clients’ risk profiles are determined and adhered to.
5. Details of the firm’s compliance procedures – assuring clients of the highest possible standards and assurance that risk profiles are always accurately and faithfully respected.
6. Clear and consistent explanation and justification of the use of insurance bonds for investments.
7. Unambiguous policy on structured notes, UCIS funds, in-house funds, non-standard assets and any ongoing commission-paying investments. Report of all investment recommendations for all clients and evidence as to how these match individual risk profiles.
8. Disclosure of fees, charges and commissions on all products and services at time of sale, in writing, before clients commit.
9. Account of how clients are updated on fund/portfolio performance.
10. Public evidence of complaints made, rejected or upheld and redress paid.
For more in depth explanation check out our other blog on the ten standards:

Cartoon blog – Don’t be the next pension scam victim
March 5, 2019
No more bogus life assurance policies in Spain
The Spanish Insurance Regulator – the DGS (Dirección General de Seguros y Fondos de Pensiones) – has made a most welcome judgment. This outlaws the mis-selling of bogus life assurance policies as investment “platforms” – aka “life bonds”. Read the translated summary below.

The iniquitous practice of scamming victims into these expensive, pointless bonds – so beloved by the “chiringuitos” (scammers) on the Costa Blanca and Costa del Sol for many years – will now result in criminal convictions for the peddlers of these toxic products.

The DGS’ judgment has provided reinforcement to the earlier Spanish Supreme Court’s ruling that life assurance contracts used to hold “single-premium” investments are invalid. This heralds a huge step forward in cleaning up the filthy scams which have for so long proliferated in popular British expat communities – making the victims poor and the perpetrators rich. This evil practice came to a head when scammers Continental Wealth Management collapsed in a pile of debris in September 2017. The main perps: Darren Kirby, Dean Stogsdill, Anthony Downs, Richard Peasley, Alan Gorringe, Neil Hathaway, Antony Poole all ran for the hills. Other scammers who played supporting roles – including Stephen Ward, Martyn Ryan and Paul Clarke – slithered away quietly to ply their scams elsewhere.

The DGS ruling has opened the way for criminal prosecutions against all those at Continental Wealth Management who profited so handsomely from flogging “life bonds” by Old Mutual International (aka OMI and Royal Skandia), Generali and SEB. While it goes without saying there will be a hearty cheer about the jailing of Darren Kirby and his merry men, they will soon be joined by other individuals who have joined in the bogus life insurance fest just as enthusiastically. And, of course, the life offices – from OMI, Generali and SEB, to Friends Provident and RL360 – will be treated to a proceeds-of-crime party.

Guest of honour will, of course, be Peter Kenny of OMI. But just to make sure nobody feels left out, Hansard and Investors Trust will certainly get their invites. Maybe Wormwood Scrubs will set up their own wing for life-office scammers.

It has long seemed curious that such a delightful part of Spain as the Costa Blanca should have fostered such an evil industry. From the arch scammer himself – Stephen Ward of Premier Pension Solutions, and his many associates including Paul Clarke who was helping him flog Ark before he joined CWM to learn to scam on a much larger scale. But anywhere along that delightful stretch of coastline running from Valencia to Alicante there are dozens of firms giving the life bond machine plenty of welly.

So popular is the use of life bonds among the seedier sector of the financial services industry, that multi-national firm Blevins Franks have their own their “exclusive” offering of bogus Lombard bonds. And you can see why: these scammers earn 8% from flogging these bogus life assurance policies. That’s 8% for doing nothing – and for trapping their victims into paying back this commission over up to ten years. Often long after the victims have worked out that the bond serves no purpose except to prevent the funds from ever growing.

The victims themselves – hundreds of which lost most (or in some cases all) of their life savings to Continental Wealth Management – will indeed see the DGS’ ruling as wonderful news. They will certainly celebrate the fact that justice has at last prevailed and that the law in Spain has made it clear that selling life assurance policies the traditional scamming way is illegal.

Continental Wealth Management (CWM – “sister company” to Stephen Ward’s Premier Pension Solutions) was set up initially to provide the cold calling and lead generation services to support Ward’s many scams – including the Evergreen (New Zealand) QROPS scam. Evergreen was swiftly followed by the Capita Oak and Westminster scams (now under investigation by the Serious Fraud Office). Unregulated, and staffed by unqualified salesmen who took it in turns to sport grand titles such as “Managing Director” and “Investment Director”, most of these spivs had been car salesmen or estate agents before flogging QROPS and life assurance contracts used to hold the toxic structured notes which destroyed so many millions of pounds’ worth of the victims’ life savings. Many of these bonds were supplied by Old Mutual International, who despite the huge losses on the funds, continued to take their fees monthly.

Back in April 2018, OMI and the IOM were defeated by Spanish courts ruling that the jurisdiction in litigation against them for facilitating financial crime should be in Spain. This was a welcomed victory for the victims in the face of so much corruption and fraud in Spain for many years. It is certainly a turning point in the quest for justice by the thousands of victims of scammers such as Continental Wealth Management and life offices such as Old Mutual International, Generali and SEB.

I will be writing to all advisory firms who are selling life bonds to victims in Spain to advise them that this is now a criminal matter and to warn them that they will be reported to the DGS.

————————————————————————————————————————————————————–

Madrid, 10 January 2019

General Directorate of Insurance and Pension Funds (DGS)

Complaints service file number 268/2016

COMPLAINT BY A CONTINENTAL WEALTH CLIENT IN RESPECT OF HEAVY LOSSES INCURRED ON HIS PENSION TRANSFERRED TO A BOURSE QROPS AND PLACED IN A GENERALI INSURANCE BOND.

The Directorate General of Insurance and Pension Funds is competent under the powers conferred on it by Article 46 of Law 26/2006 of 17 July, on the mediation of private insurance and reinsurance, to examine the claim formulated for the purpose of determining non-compliance with current regulations on the mediation of private insurance and reinsurance, and whether this is decisive for the adoption of any of the relevant administrative control measures, particularly those of administrative sanction, which contravene the aforementioned Law.

Article 6 of Law 26/2006, of 17 July, on private insurance and reinsurance mediation, which regulates the general obligations of insurance intermediaries, states:

“Insurance intermediaries shall provide truthful and sufficient information in the promotion, supply and underwriting of insurance contracts, and, in general, in all their advisory activity….”

Article 26 paragraphs 2 and 3 of Law 26/2006, of 17 July, on private insurance and reinsurance mediation, which refers to insurance brokers, establishes the following:

“Insurance brokers must inform the person who tries to take out the insurance about the conditions of the contract which, in their opinion, it is appropriate to take out and offer the cover which, according to their professional criteria, is best adapted to the needs of the former. The broker must ensure the client’s requirements will be met effectively by the insurance policy.”

Article 42 of the Private Insurance and Reinsurance Mediation Act, which refers to the information to be provided by the insurance intermediary prior to the conclusion of an insurance contract, provides:

“Before an insurance contract is concluded, the insurance intermediary must, as a minimum, provide the customer with the following information:
1. a) The broker’s identity and address.
2. b) The Register in which the broker is registered, as well as the means of verifying such registration.”
Insurance agents must inform the customer of the names of the insurance companies with which they can carry out the mediation activity in the insurance product offered.

In order for the client to be able to exercise the right to information about the insurance entities for which they mediate, insurance agents must notify the client of the right to request such information.

Banking and insurance operators, in addition to the provisions of the previous letter, must inform their clients that the advice given is provided for the purpose of taking out an insurance policy and not any other product that the credit institution may market.

Insurance brokers must inform the client that they provide advice in accordance with the following obligations:

“Insurance brokers are obliged to carry out and provide (to the customer) an objective analysis on the basis of a comparison of a sufficient number of insurance contracts offered on the market for the risks to be covered. Brokers must do this so that they can formulate an objective recommendation.”

On the basis of information provided by the customer, insurance intermediaries shall specify the requirements and needs of the customer, as well as the reasons justifying any advice they may have given on a particular insurance. The intermediary must answer all questions raised by the client regarding the function and complexity of the proposed insurance contract.

All intermediaries operating in Spain must comply with the rules laid down for reasons of general interest and the applicable rules on the protection of the insured, in accordance with the provisions of Article 65 of the Law on the Mediation of Private Insurance and Reinsurance.

Every insurance intermediary is obliged, before the conclusion of the insurance contract, to provide full disclosure. In the event that a mediator was an Insurance Broker or independent mediator, he is also obliged to give advice in accordance with the obligation to carry out an objective analysis. This must be provided on the basis of the analysis of a sufficient number of insurance contracts offered on the market for the risks to be covered. The mediator can then formulate a recommendation, using professional criteria, in respect of the insurance contract that would be appropriate to the needs of the client.

In the case in question, there is no evidence that the aforementioned information was provided to the client before the investment product was contracted. Therefore, Article 42 of the regulations has been breached.

Therefore, this Claims Service concludes that the mediator must justify the information and prior advice given to his client, so that the obligations imposed by the Law of Mediation can be understood to be fulfilled with the aim of protecting the insured. Failure to comply with their obligations could be considered as one of the causes of the damage that would have occurred to their client.

The claim is understood to be founded. In the opinion of this Claims Service, the mediating entity has committed a breach of the regulations regulating the mediation activity – specifically of the provisions of articles 6 and 42 of Law 26/2006 of Mediation of Private Insurance and Reinsurance.

The DGS requires the mediating entity to account to this Service, within a period of one month from the notification of this report, for the decision adopted in view of it, for the purposes of exercising the powers of surveillance and control that are the responsibility of the Ministry of Economy and Enterprise.

The interested parties are informed that there is no appeal to this judgment. Both the claimant and the mediating entity are made aware of their right to resort to the Courts of Justice to resolve any differences that may arise between them regarding the interpretation and compliance with the regulations in force regarding the mediation of private insurance and reinsurance, in accordance with the provisions of articles 24 and 117 of the Constitution.

Chief Inspector of Unit

Ministry of Economy and Enterprise

Secretary of State for the Economy and Business Support
February 17, 2019
Is there no escape from the cold-calling, snake-oil salesmen?

Just as predicted, the scammers have managed to sidestep the cold-calling ban on pension selling by using a slightly different tactic. No surprise there then. Just as they morphed from pension liberation into high commission investments, it was only a matter of time – well just two weeks to be precise – before a firm called Cadde Wealth Management approached the matter from a different angle. There really is no escape from the cold-calling snake-oil salesmen: lawless, shameless and – unfortunately – quick-witted.

City Wire report that they have seen emails from Adviser Breakthrough on the success of their new pitch. The email reports that appointments had been made for Cadde Wealth Management for pensions advice through cold calling. The firm’s chief executive, Paul Cadde, is also the chief executive of Adviser Breakthrough.

The advice is that they can continue to cold call as long as the intro to the call doesn’t mention “pension advice”. Instead, they are calling and asking if the call receiver needs reviews of ISAs, bonds, cash, unit trusts and any other investments. It seems that these calls can then follow along the lines of the conversation drifting towards the cold-call receiver wanting pension advice. Thus the cold caller can claim they are not cold calling about pensions, but can offer advice in pensions as an after thought.

Oh, how so smart of these silver-tongued, evil con men. They worm their way into people’s heads and finances with a change of script, to escape the new laws. All it seems we can do here in the Pension Life office is sit here wincing and waiting for news of the next big pension scam. Our senses tell us that there is bound to be a rise in QROPS and SIPPS pension scams.

We can see the way these cold calls will work:

Cold calling snake, “Hi, I’m calling to see if you would like a free review on the performance of any ISA’s you own?”

Call victim, “Well, I’m currently very happy with my ISA’s performance, but I am a little worried about my pension plan. Can you help me with my pension?“

Cold calling snake, (rubbing his scales together in glee at the free ride) “I certainly can.”

Bish, Bash, Bosh, the cold-calling snake didn’t call directly regarding pensions advice; the receiver actively asked for it. Therefore, the cold- calling snake committed no offence. Our advice in regards to cold calling is – and always will be – the same: just hang up.

I wouldn’t be surprised if these snake-oil salesmen could master a technique whereby they start off offering double glazing and turn the call into a pension scam call!

Regular readers know how much we love researching financial advisory firms so here goes on Cadde Wealth Management.

Cadde Wealth Management have a TrustPilot score of 7.4 and three and a half stars. However, they have only had one reviewer, so we can’t really trust that!

On to their website – https://www.cadde.co.uk/ – Growing and preserving family finances since 1985.

Run by a feller named Paul Cadde – who apparently qualified as a financial adviser in 1985. We were deeply disappointed to find that he had no registered membership with the CII or the CISI. If you are unsure on what these are please check out our qualified and registered blog.

Not really a great start for Cadde Wealth Management: not only is Mr. Cadde happy to ignore the cold calling ban, but he is also unqualified and unregistered to give financial advice! Also listed on their financial team: Peter Staple, Wyn Matthews, Graham Dragon, Nikki Cadde and Katy Comber. None of these team members are listed on any of necessary financial institutes’ websites’ registers. They also mention Henry the dog: I would suggest he is probably the most honest member of the office!

So, the advice we give is simple: “cold called by a firm called Cadde Wealth Management? Just hang up!”

January 30, 2019
NOVIA GLOBAL VS OLD MUTUAL INTERNATIONAL

The problem with money is that it blows away if you don’t hold it down, tie it up or stuff it down your knickers. That’s why you need to put it somewhere safe: in a shoe box on top of the wardrobe; under your mattress; in the safe or – if you’re feeling really brave – in the bank. Trouble is, left in cash, money shrinks (inflation, charges, moths). This is why so many advisers recommend a platform – aka “somewhere safe” to keep your money.

So, let’s look at two possible alternatives: the Novia Global platform and the Old Mutual International “bond”.

I’ve met Bill Vasilieff who runs Novia Global. He serves Earl Grey and nice biscuits. A man of few words, and even fewer syllables, he gave me a quick rundown on how the Novia Global platform works – and how much it costs.

I haven’t met Peter Kenny of Old Mutual International (OMI) – although I have spoken to him several times. As broadly Irish as Bill is Scottish, Peter Kenny also comes across as a softly-spoken and sincere chap. But there the similarity seems to end. Peter stood me up – I got a view of his office waiting room but wasn’t offered a cup of tea (let alone a biscuit).

Mind you, there isn’t much I don’t know about the Old Mutual International bonds. I’ve seen thousands of their policyholders’ statements – and they are frighteningly ugly and depressing. They accurately, faithfully and unemotionally report the destruction of their victims’ atrocious losses. And OMI regularly (like clockwork!) take their quarterly fees – irrespective of how deep the destruction of the policyholders’ funds is. In fact, some victims even find themselves in negative figures as OMI continue to account for their fees long after the whole blooming lot has gone.

Anyway, back to Bill and his welcoming teapot….I can’t really compare him to Pete but I can compare the two products. So here is a brief and brutal side-by-side line up of what the two “platforms” offer. And how much they cost. And how difficult they are to get out of. And how much financial crime they are associated with.

So the OMI “life bond” costs almost six times as much as the Novia Global platform. But that is if you are locked in for five years. You can get it cheaper – 1.15% – if you get locked in for ten years. But you must remember that if you are scammed, then OMI will have paid the scammer an 8% commission and you could get stuck with paying the quarterly fees for the next ten years, even if you’ve figured out you’ve been scammed. And the quarterly fees are based on your original investment – not on the impaired amount. If you’ve been scammed, and your fund value drops inexorably, the 1.15% will become bigger and bigger. And even if you lose your whole fund, OMI will keep taking their charges and pushing you further and further into debt.

A bit like the lyrics to Hotel California, with an OMI “bond”, you can’t check out any time you want, and you can only leave after between five and ten years. OMI will take that number of years to claw back the commission paid to your adviser – even if you have long since learned that your adviser was an unregulated scammer and has conned you into unsuitable, high-risk, high-commission investments that have badly damaged your fund. You are stuck with paying the quarterly fees to OMI – even after your whole fund has gone. One victim went from plus £300k to minus £25k – and counting. As your funds inside the OMI bond shrink, the 1.15% grows and helps destroy what is left of your fund even faster. But with the Novia Global platform, you can leave any time you want. No exit penalties. No hard feelings.

In Spain, the Supreme Court has ruled that bogus life assurance policies – such as those provided by Old Mutual International – used to hold investments are illegal. This is because they are neither proper insurance policies (which take risk in the interests of the consumer) nor are they proper investment platforms. The Spanish aren’t stupid – they can spot a scam much more easily than other jurisdictions and take action to prevent them from ruining future victims. This is in stark contrast to the likes of the Isle of Man and Gibraltar – which seem to revel in encouraging scams and protecting firms such as Old Mutual International (and STM Group) which facilitate financial crime on a massive scale.

January 30, 2019
Expats and Brexit – Safeguard your pension

BREXIT is the question on everybody’s lips at the moment. BREXIT: will we? won´t we? deal? no deal? So many unanswered questions and so much scaremongering. We would like to offer some helpful words and hopefully protect you from making rash decisions. This could help you to safeguard your pension. Many scammers are trying to cash in on Brexit – make sure sure you’re not their next victim.

Remember I am not a financial adviser. I am a blogger, and I write about financial crime. I provide information about past scams and on how to avoid falling victim to new scams – especially pension scams. The words I write are aimed to help you safeguard your pension from the many offshore scammers.

So, Expats, what does Brexit mean for your pension rights? The short answer is that we really do not know! There are currently lots of “coulds” and “mights” being thrown around, but no certainties. And herein lies the risk that you and your pension could fall victim to a scam with all this scaremongering.

We are seeing a lot of adverts for expats to transfer into a QROPS before the dreaded 11pm on March 29, 2019. One company I have noticed that seems to be using Brexit to attract customers is Spectrum IFA. Back on 1st July 2018, we wrote a qualified and registered blog about Spectrum IFA. They didn´t do too well.

Firstly, despite Spectrum IFA advertising themselves as “international financial advisers”, with some digging we were able to find out that they DO NOT in fact have an investment licence. This means they are not legally allowed to advise on pensions or investments. Secondly, they scored rather poorly on the qualified and registered percentage too. Out of the 16 advisers we checked up on, only four were registered with the appropriate institutes. The rest came up red – meaning the institute had no record of them.

Worrying isn´t it? Offshore companies can try to claim they are international financial advisers, but actually be unregulated and unqualified to carry out the very service they offer! The “advisory” firms have flash websites, and some have several offices around Europe and beyond. Their PR is great at scaremongering expats about their pension investments in the lead up to Brexit.

In Spectrum’s ´Deal or no deal´ article number 14, they suggest you marry a Spaniard in order to prepare for Brexit. I´m not sure about you, but I feel that getting hitched to a native to be able to stay in Spain is a pretty drastic measure and definitely more than a little illegal.

Spectrum IFA is just one example of a firm that probably ought to be given a wide berth when transferring your precious pension fund offshore. Safeguard your pension by avoiding unregulated and unqualified firms like this one.

********

It may seem daunting when you read that your UK pension could be subjected to extra taxes if we leave the EU on a no-deal basis. You may be thinking that you should transfer into a QROPS quickly, to save on these taxes. But what you really need to know is that a QROPS is not without punitive costs of its own. They can be expensive and unless you have a good lump sum to transfer you could see a huge chunk of your pension pot taken in transfer and set-up fees anyway! Potentially making you worse off.

Unfortunately, until we make a deal or actually go through with Brexit, nothing is very clear for expats. Which leaves us in an uncertain time and situation. This, I understand, may be daunting for many people, but I urge you to take a deep breath before considering any speedy offshore pension transfers. Thousands of people – especially those who have already fallen victim to scammers such as Continental Wealth Management – would give you exactly the same urgent advice.

If you do want to transfer your pension, please heed this advice to safeguard your pension:

Make sure you choose a reputable firm – one that is regulated, insured and employs fully qualified (and registered) advisers.

We did a series of blogs last year on offshore companies and their advisers. The results were extremely worrying. Aside from their blatant disregard for the necessity of these qualifications – due to being offshore – the number of unqualified advisers offshore was cause for serious concern. Many of the firms had not one single qualified and registered adviser on their team.

Qualified & registered? We do not need to be – we are offshore!

Know all the correct questions to ask an adviser before you sign on the dotted line.

A reputable firm will have a fact-find procedure, and adhere to a client’s risk profile.

A reputable firm will have compliance procedure.

A reputable firm will have clear and consistent explanations and justifications for the use of insurance bonds.

Where will your funds be invested, and how will you know if this is in line with your risk profile?

A pension fund should be placed into a low-medium risk investment.

Scammers tend to go for high-risk, professional-investor-only investments as they offer them the best commissions. But a pension fund should have more protection than this. Avoid investments that involve structured notes (like CWM´s Blue Chip notes), UCIS funds (like Blackmore Global), in-house funds, non-standard assets and any ongoing commission-paying investments.

Insurance bonds – often used by scammers – are usually an unnecessary double wrapper on your fund, that costs you more in fees and charges than a straightforward platform, lining the pockets of the scammers – but making your fund smaller.

How much will the fees and charges be? Remember NO pension transfer is free.

Legitimate firms will normally have a small transfer charge and a small annual fee.

Scammers will often be vague about fees and charges, and avoid giving you a straight answer so they can cover up the true figures. These hidden figures can see your pension fund decrease by 25% or even more in some cases.

A reputable firm should offer you regular updates on the progress of your fund.

You should receive an annual review and a quarterly update showing the fees, charges and growth of your fund.

If your new firm and adviser fail to do this, alarm bells should ring loudly.

Finally, a reputable company will publish evidence to show records of complaints made, rejected or upheld and redress paid.

If the adviser cannot show you all this information, do not trust them.

If it all sounds to good to be true, it probably is – RUN!

Safeguard your pension from the scammers

January 7, 2019
High Court finally winds up the truffle saga pension scam

This could possibly be described as wonderful news for the victims of Viceroy Jones New Tech Ltd, Viceroy Jones Overseas PCC Limited, Westcountrytruffles Limited, Truffle Sales Ltd and Credit Free Limited. Or maybe not. The whereabouts of the funds is unknown. This pension liberation and investment scam saw 100 investors conned out of £9m of their pension savings.

The full story can be read here:

https://www.ftadviser.com/pensions/2018/12/13/companies-behind-9m-pension-truffle-scam-shut-down/?utm_campaign=FTAdviser+news&utm_source=emailCampaign&utm_medium=email&utm_content=

In short, Viceroy Jones used unregulated financial advisory firms to persuade victims to invest in ‘high-value truffles for commercial sales’. With the promise of high returns on this fixed-term investment (lasting 15 years), investors believed they would reap the benefits once the truffles were harvested.

No truffles were ever harvested.

In reality, the investment saw most of the £9m of funds invested being paid into offshore bank accounts. These funds were then paid out in high commissions to the unregulated advisers who mis-sold the scheme. No supporting documents have been found regarding these investments, so the whereabouts of any remaining funds is unknown.

As I said above, it is only possibly wonderful news for the victims. Whilst the company has been wound up, the victims have been promised no compensation and do not know where their money is. This is a not an uncommon situation in scams like these. The victims of Peter Moat’s company – Fast Pensions, also do not know where their funds have gone.

Cheryl Lambert, Chief Investigator for the Insolvency Service, said:

“We take the matter of unregulated pension liberation investment schemes very seriously and will take action to stop any such schemes who have acted unscrupulously.”

However, I feel I have to disagree.

What message does the Insolvency Service send?!?

Are the perpetrators behind bars? NO!

Are the perpetrators having all their assets frozen and liquidated to pay the victim’s back? NO!

Are the perpetrators facing life without a pension? I DOUBT IT!

Are the perpetrators sorry for what they did? I DOUBT IT!

There is a long list of other pensions scammers who have scammed millions out of the public and still walk freely, creating new scam after new scam.

But to name a few of the scammers:

XXXX XXXX

Stephen Ward

Peter and Sara Moat

Phillip Nunn

David Vilka

Some of the scams they have sold:

Ark pension liberation scam

Capita Oak

Continental Wealth Management

Blackmore Global Fund

Fast Pensions

See our blog on the Top 10 Deadliest Pension Scammers.

Winding up these companies is often of little help to the scam victims. What is left of their funds (if any) is passed on to another trustee (often Dalriada) to deal with the ‘clean up’. This action, however, is not without cost and often the funds just sit there doing nothing.

Take the Ark victims whose schemes were transferred to Dalriada – they have not had any compensation in the seven and a half years Dalriada has acted as their trustees. Dalriada, however, has continued – without fail – to charge their yearly fees and costs, further decimating the victims’ funds. AND without any suggestion of what will happen next!

Furthermore, victims that fell prey to these scams, face more stress as they are also contending with HMRC. The Taxman is sending out demands for huge tax bills, as they claim the money the victims liberated (“borrowed”) from the Ark schemes was not tax free. 55% tax is applied to money that was liberated from pension funds – this is deemed an “unauthorised payment charge” by HMRC.

The High Court needs to do a lot more than this, to send a clear message to these scammers. Prosecutions, jail sentences and large fines would be a good start.

All enquiries concerning the affairs of the companies should be made to: The Official Receiver, Public Interest Unit, 4 Abbey Orchard Street, London, SW1P 2HT. Telephone: 0207 637 1110, Email: piu.or@insolvency.gsi.gov.uk.

Cartoon blog – Don’t be the next pension scam victim

December 18, 2018
Belgravia Wealth – qualified and registered?
Back due to popular demand, qualified and registered company blogs. Today, I am looking into Belgravia Wealth, a Swiss based company. Belgravia Wealth – qualified and registered? Lets see if you are.

Belgravia Wealth has an impressive list of services offered. However, those who follow our blogs will know that the terms “structured products” and pensions together, makes us shudder with horror. We have seen so many pensions ruined by being invested in high-risk, fixed-term, for-professional- investor-only structured products.

Whilst I have a queue of trolls telling me that structured notes are “not all that bad”, take a look at this video we created about John Rodgers and the ´blue chip notes´ that destroyed his pension fund. He was a victim of a pension scam courtesy of Continental Wealth Management, which affected around 1,000 members.

What Belgravia say on their website:

“Belgravia Wealth Management is a Swiss-established and regulated company founded to fill the advice gap that currently exists between the retail financial companies and the services available to the UHNW clients. As an independent company, we ensure that you benefit from impartial advice and access to offerings from all the financial providers available in the market.”

It is great to read that Belgravia Wealth is regulated. Many firms I have written about fail to meet this simple – but essential – requirement. They claim to be independent and suggest that their advice is impartial. I wonder, though, with all this transparency in their blurb – are their staff qualified and registered to give this “impartial” advice?

Whilst their website offers a tab entitled “Careers”, it does not offer a list of staff that actually work for Belgravia Wealth. So, over to Linkedin to see if Belgravia Wealth staff advertise their employment with the company.

As with all these blogs, we only go by the information we can find, which is the same information potential clients would be able to access.

IFAs and their clients are invited to add to this blog, correct it, improve it. We will gladly edit our information if proof of qualification certificates can be supplied. Here’s a link to the three registers if you want to double check for yourself:

http://www.cii.co.uk/web/app/membersearch/MemberSearch.aspx

https://www.cisi.org/cisiweb2/cisi-website/join-us/cisi-member-directory

https://www.libf.ac.uk/members-and-alumni/sps-and-cpd-register – Claim to a DipFA
1. Spencer Freeman-Haynes – Director Zurich and Basel region at Belgravia Wealth Management – claims CISI – DOES not appear on the register
2. Emmanuel Obi, Jr. LL.M – Head of Compliance – Switzerland at Belgravia Wealth Management – no financial qualifications claimed (but how can he oversee the compliance function if he isn’t qualified?)
3. Mark Saunders – Regional Manager – Geneva Area, Switzerland – lists various CII qualifications – DOES NOT appear on the register
4. Ian Crompton – Director at Belgravia Wealth Management SARL – Claims CISI – DOES NOT appear on the register
5. Euan Cameron – Belgravia Wealth Management – Basel Area, Switzerland – No financial qualifications claimed
6. Mystery Man (I do not have access to the profile) – Manager of Business Development – Belgravia Wealth Management – without a name I can not check his qualifications
Belgravia Wealth Switzerland has 6 members of staff listed as working for them, and from what I can tell NONE of them are qualified or registered to give financial advice.

Belgravia Wealth- qualified and registered 0%
October 16, 2018
STM Group Plc – announces trading update

STM Group has announced the following trading updates for the first half of this year.

STM state that the first half of the year has progressed in line with management´s expectations. They refer to this with particular emphasis on their SIPPS program. For those readers who are unfamiliar with STM’s past investment scams, here is a little bit of background information:

STM Fidecs scammed hundreds of victims out of their pensions. STM Fidecs took business from unlicensed scammer XXXX XXXX of Global Partners Limited (only had an insurance license with Marcus Groombridge’s firm Joseph Oliver) and then invested 100% of the victims’ funds into an illegal UCIS fund – run by XXXX XXXX. This fund was called the Trafalgar Multi-Asset Fund.

One of the updates is that STM Group have appointed a Group Internal Auditor. I wonder if this is going to make their trading any more honest. One can only hope that their future auditing will be considerably better than their past.

STM Group accepted hundreds of transfers from UK residents in whose interests it was NOT to swap their British pension arrangements for an expensive QROPS. STM Group then allowed these victims to have funds invested in XXXX XXXX’s own fund – Trafalgar Multi-Asset (a UCIS which is illegal to promote to UK residents). There didn´t seem to be much in-house auditing going on then.

What makes this more hard to swallow is that:

Neither STM Fidecs nor the Gibraltar FSC has said a word about redress for the Trafalgar Multi-Asset Fund victims.

Instead, in March of this year, STM Group’s Alan Kentish, was delighted to deliver reports of record profits for 2017. This was after he was arrested in October 2017. Unfortunately (for the Trafalgar Multi-Asset Fund victims), he was released without charge and was fully backed by the STM Group board.

We are still wondering what the hell the Gibraltar FSC is going to do about this fraud. Leaving STM Group to commit further fraud does not seem to be a viable option.

August 13, 2018
Callaghan QROPS Spain – qualified and registered?

If you have been following Pension Life´s blogs, you will know that we have been conducting a series of investigations into qualified and registered financial advisers in various firms. Today is the turn of Callaghan QROPS Spain – qualified and registered?

IFAs and their clients are invited to add to it, correct it, improve it. Here’s a link to the three registers if you want to double check:

http://www.cii.co.uk/web/app/membersearch/MemberSearch.aspx

https://www.cisi.org/cisiweb2/cisi-website/join-us/cisi-member-directory

https://www.libf.ac.uk/members-and-alumni/sps-and-cpd-register – Claim to a DipFA

Please note that this data is correct as at today, 11/07/2018

**********

What Callaghan QROPS Spain say about themselves:

“Located in Cabo Roig, Alicante, GC QROPS has a long history of assisting UK Expats with their pension transfers. Our pensions advisors are all UK Qualified and Registered IFAs and give up-to-date informed evaluations with a no obligation policy running throughout the company.

Graeme Callaghan Pension Services has been successfully assisting UK expats in Spain with UK pension transfers for 9 years since 2006. We have assisted in over 500 successful UK pension transfers for UK Pensioners.”

Callaghan QROPS Spain claim they have been advising UK expats on their pension transfers for nine years – with this claim, let’s hope Callaghan QROPS Spain has advisers which are qualified and registered? Can this firm score a better percentage than some of the other companies of the past weeks?

Callaghan QROPS Spain – advisers qualified and registered?

Upon clicking on the ´Our Advisers´ tab on Graeme Callaghan´s website, I was presented with this statement:

´All our advisers are U.K qualified. We offer a free no obligation assessment on all your existing plans. Including your U.K pensions, your existing QROPS and ISA’s.

In some circumstances our advisers will travel to your country of residence. We can also arrange for your travelling requirements to one of our offices in Spain.´

With no links to any real person to represent this Callaghan QROPS Spain firm, it is very hard to make a judgement on who you are entrusting you valuable pension fund to. Callaghan QROPS Spain do little to give a true representation of their firm with no transparency about their staff or their qualifications – I was unable to even find a picture of Graeme Callaghan himself. They do however mention that they are looking for UK qualified financial advisers.

What I did find was a host of testimonials from Hollywood movie stars and professional sports persons etc etc assuring me that Callaghan QROPS Spain had supplied, ´Top Service´, and were ´Highly recommended´.

What I find hard to grasp is that Callaghan QROPS Spain managed to go to all the effort of giving a long list of testimonials, but were unable to take the time to put anyone in their ´Our Advisers´ tab. Surely a reputable financial advisory company would be proud to show their qualified and registered IFAs who give ´top service´ to pension holders?

As shown in the image above there were lots of links to social media, so I chose to follow the Facebook one first. Here I was able to find an image of Graeme Callaghan of Callaghan QROPS Spain (and I also found out they were Callaghan QROPS Portugal too).

On his facebook page dated 06/07/2018 he states: ´Find us ranked on page one by Google with an ”Evergreen QROPS” search. We are assisting multiple members of this scheme with transfering to a scheme recognised on the HMRC website. Contact us for a free no obligation assessment on your existing QROPS or UK pension´.

Those of you who are familiar with the CWM pension scam debacle and the Evergreen QROPS liberation scheme will know that this pension scam was hustled by unregulated and unqualified advisers and resulted in members losing massive percentages of their pension funds when CWM collapsed. Furthermore, the victims of this scam face large tax bills from HMRC after they received Stephen Ward’s Marazion “loans” on their pension transfers.

How the Evergreen QROPS and Marazion Loans pension scam worked.

Graeme Callaghan is also using the threat of Brexit as a compelling reason for expats to move their pension fund into a QROPS. It is questionable whether Brexit will have any effect at all on expats’ pensions and many firms are using this as a “scare tactic” to get people to transfer into a QROPS – often entirely unnecessarily.

As I have no other staff to go on for Callaghan QROPS Spain, I am going to check the registers for Graeme Callaghan himself. Interestingly on his Facebook profile he states he studied at City University London, but he fails to mention what subject he studied there.

Graham Callaghan – Director? Sole financial adviser? Position unclear – however he seems to be the owner of Callaghan QROPS Spain – IS NOT LISTED ON ANY OF THE REGISTERS FOR FINANCIAL ADVISERS.

Callaghan QROPS Spain – qualified and registered? 0/1 – 0%

EDIT: a search through Linkedin of Callaghan QROPS Spain revealed that there is in fact another employee, Dylan Callaghan. Listed job role of UK Pension Adviser at Graeme Callaghan Pension Services, he too went to went to University of London where he apparently studied for an MBA.

Despite stating that he is a UK pension adviser for the company, he lists no financial qualifications and does not appear on any of the three registers. Therefore, Callaghan QROPS Spain – qualified and registered? 0/2 employees 0%.

Other claims by Callaghan QROPS Spain: Callaghan Financial Services can advise on the whole of the QROPS market and we are not tied to one jurisdiction. Really? And how do you manage that? You are an unregulated company, with zero qualifications.

“We believe part of our success is due to offering a free no obligation assessment on all your existing plans.” Here at Pension Life we are always supicious of the word ´free´.

If I was looking to swap my pension plan I would steer clear of Callaghan QROPS Spain.

Unqualified, unregistered, unregulated and non-transparent – this company is no place for your pension fund – even if Eric Roberts (Hollywood Actor) states they are an excellent company!

CWM Pension scam – A victim’s reconstruction

July 11, 2018
10 essential questions to ask an IFA
Most victims of pension and investment scams bitterly regret not having asked more questions with regards to their financial planning. The problem is that they wouldn’t have known what questions to ask, and they probably wouldn’t have understood the answers even if they had. Pension Life offer you 10 essential questions to ask an IFA so you can ensure you are not the next victim.

All existing victims wish they had asked questions, obtained assurances, checked advisers’ qualifications and regulation. But, of course, it is now too late for the victims who have lost part or all of their life savings.

These victims all agree that it is important to prevent future victims. This is why we have come up with these 10 essential questions to ask an IFA, when considering financial planning and the transfer of your pension:

1 – How is the adviser and/or his firm licensed to provide advice to you in the jurisdiction where you – the client – live? Don’t be fobbed off with the answer that the adviser has an insurance license – that isn’t enough. The adviser needs an investment license. Also, don’t be fobbed off if the adviser says the firm is licensed in another jurisdiction – it needs to be licensed for where you, the client, live.

2 – If you are transferring a DB (defined benefit) or FS (final salary) scheme, you must get FCA regulated, qualified, independent advice on the merits of the transfer. Remember, the advice might be that you are better off leaving your pension where it is.

3 – Make sure the transfer recommendation (from a DB or FS scheme) is correct. Get a second opinion. You only get to do this once – and if the wrong road is chosen, it is very difficult (if not impossible) to correct it.

Check that the transfer advice report makes it clear that you, the client, are being advised on the transfer and that the advice is about what you should do – not what you could do.

4 – Don’t let the adviser put you into an insurance bond. Examples of these are Old Mutual International, SEB, Generali, Friends Provident, RL360, Hansard, Investors Trust. An insurance bond is a wrapper. A QROPS is a wrapper. You don’t need two wrappers. That’s like Superman wearing two pairs of pants over his tights.

The only purpose an insurance bond serves is to pay the IFA 8% commission. Plus, the insurance bond will tie you in for between five and ten years, and you neither need nor want to do that with a pension.

Insurance companies will take business from any old unlicensed, unqualified scammers. They don’t care. The quarterly charges are called “management charges” but that is very misleading because they don’t do any actual managing. Once the value of your fund starts to diminish because of the high charges and the toxic, illiquid, high-risk investments, the insurance company will keep taking its fees – sometimes until the whole fund is extinguished and worthless.

5 – What qualifications does the adviser have?

You wouldn’t take medical advice from an unqualified person posing as a doctor; legal advice from an unqualified person posing as a solicitor or accountancy advice from a person posing as an accountant. So why take financial adviser from someone with no qualifications?

It is a sad fact that in many jurisdictions, so-called advisers spring up with no qualifications and even no Financial Panning experience. Sometimes, they had been selling mortgages, second-hand cars or ice cream the previous week to selling pensions.

Pension Life covered the question of qualifications in a recent blog by Kim:

Using advice from Chartered Global about financial qualifications, you can discover that:
Level 3 Financial Adviser Qualifications

The most basic or entrance tier is the certificate level which is classed as a level 3 qualification within the UK framework, equivalent to A levels. Level 3 qualifications include:

CertCII: Certificate in Financial Planning issued by the Chartered Insurance Institute

CertPFS: Certificate in Financial Planning issued by the Personal Finance Society

CeFA: Certificate in Financial Advice issued by the Institute of Financial Services

Cert IM: Certificate in Investment Management issued by the Chartered Institute for Securities & Investment

Level 3 qualifications are sometimes held by adviser office staff and certain mortgage or protection advisers in a bank for example. These certificates require passing a selection of exams over 1-2 years and holders will have a general grounding in financial planning and financial services.
Level 4 Financial Adviser Qualifications

However, since 2012 financial advisers in the UK have been required to hold a minimum of a level 4 qualification to be able to continue to provide independent financial planning advice. The minimum required qualification to provide independent financial planning advice in the UK is now the diploma level, a level 4 professional qualification.

Look for the following letters or designations to identify a level 4 adviser:

DipCII: Diploma in Financial Planning issued by the CII

DipPFS: Diploma in Financial Planning issued by the PFS

DipFA: Diploma in Financial Advice issued by the IFS

IAD: Investment Advice Diploma issued by the Chartered Institute for Securities & Investment

Building on the certificate knowledge, level 4 advisers will offer a well-rounded understanding of financial planning and products, from general investments, structured products, to basic pension, protection, tax and savings advice.
Level 6 Financial Adviser Qualifications

A full two levels higher are the profession’s top tier of financial advisers; holders of level 6 qualifications equivalent to a bachelor honours degree. Completing a comprehensive suite of professional exams over many years, these top-flight advisers will be designated through one of the following:

APFS: Advanced Diploma in Financial Planning issued by the CII

CFPCM: Certified Financial Planner

Adv DipFA: Advanced Diploma in Financial Advice issued by the IFS

Advisers at this level will have advanced expertise in the main areas of general financial planning.
6 – Is the adviser planning on investing your life savings in professional-investor-only structured notes?

Structured notes are complex, risky, expensive derivatives which are only suitable for sophisticated investors who understand them. Few advisers/brokers understand them – but love them because of the very high commissions they pay. They also love them because once they have purchased them, there is no management to do – only stand back and watch them plummet in value.

Examples of structured note providers are Leonteq (currently being sued by Old Mutual International for fraud), Commerzbank, Royal Bank of Canada and Nomura. There are, of course, many more out there.

However, if your adviser/broker says he wants to invest part of your life savings in structured notes – ignore any old baloney about “capital protection” – and RUN LIKE HELL!

7 – Why are the firm’s own in-house funds used? An adviser can’t be independent if he is recommending his own firm’s own funds.

The way that financial advice is supposed to work is the adviser does a thorough, detailed fact find to analyse the client’s individual circumstances and risk profile. Then the adviser can go out into the market and find the most suitable and cost-effective investment products.

There is a huge choice and many good low-cost investment platforms. But some firms set up their “own” funds – which are merely somebody else’s fund which has been “white labelled” as the firm’s fund. This means there are two layers of charges.

An adviser cannot be independent if he is advising that his own fund should be the investment choice. This recommendation is usually made because of the extra commission which can be earned from an in-house fund, rather than because it is in the client’s best interests.

8 – Are UCIS funds going to be used?

Many a poor victim has lived to regret his trust and faith in a silver-tongued adviser’s ability to manage his investments. UCIS funds (Unregulated, collective investment schemes) are inevitably high risk and can have catastrophic results.

Such funds include EEA Life Settlements, LM, Harlequin, Brandeaux Student Accommodation, Premier New Earth Recycling, Dolphin Trust and many more which are sometimes no more than Ponzi schemes. Underlying assets include forestry, “clean” energy, eucalyptus and truffle-tree plantations, chia seeds, fine art, wines and speculative property.

Life savings have been decimated by failed UCIS funds – make sure your adviser/broker understands you don’t want your money to be invested in any of these toxic, high-risk, unregulated funds. You could well be promised high returns, but you have to remember that with high returns comes high risk.

9 – What is the full extent of the charges/fees/commissions on the entire transaction?

So many advisers conceal the full extent of ALL the fees and commissions. Victims only find out about them long after it is way too late. The “drag” on a fund can be catastrophic, even without investment losses.

If you are being advised to go into a QROPS, there will be the set-up and yearly ongoing charge (as well as exit charge); the adviser will charge between 2% and 3% set-up and then 1% (at least) annually; if UCIS funds are used, these can pay up to 25% commission (or even more sometimes); if structured notes are used, these can pay between 6% (for the regular ones) and 8% (for the fraudulent Leonteq ones). Then there is the 8% on the insurance bond. Then there is anything else the adviser can slip in without you noticing.

Victims of poor advice often only notice the dragging effect of all these charges on their fund after a year or so – or more. And by then it is too late, and the fund can never recover.

10 – Why were you graded as a “7” balanced investor – or even higher as an “adventurous” investor (when, clearly, you should have been graded as a low-risk investor)?

Here is the basic problem – the higher an investor’s risk profile is, the riskier the investments can be. This, of course, means that the riskier the investments are, the more commission the adviser can make.

After suffering crippling losses, many victims (retrospectively) look at their statements and documentation and find that they were graded as medium or high risk without their knowledge or consent. The adviser’s excuse is that the client valued growth above all else and that this was reflected in the risk assessment questionnaire.

Often, clients start off as low to medium risk, and then the adviser surreptitiously increases the risk profile. This can have catastrophic consequences for investors – and is what ALL of the known victims report as being the cause of their crippling losses.

The bottom line is that the public needs to be educated and warned about the bad practices offshore. Only by spreading the word about what happened to existing victims, will future victims be prevented.

People who have lost part – or all – of their pensions and life savings, are devastated and destroyed. They are facing potential poverty in retirement. Some will lose their homes, their health and their relationships. Some will take their own lives.
June 25, 2018
Maltese QROPS regulations to change
Malta has announced changes to the way their QROPS funds will be regulated. The changes will come into effect from 2^nd July 2018, meaning that clients introduced by an adviser regulated only for insurance business will not be accepted as an investment adviser.

A letter this week from STM Malta reads:

“We are writing to inform you of some changes to Malta regulations which we believe will have a significant impact on the way that you conduct your pensions business in Malta. Whilst the final guidelines have yet to be published, it is anticipated that the changes will be brought into effect from 2^nd July 2018. With these changes in mind, we felt it is a good idea that we commence discussions regarding how this will impact on some of our processes going forward.

In particular, the changes will require:
- An expectation of further oversight from pension trustees in relation to investment selections by members as recommended by advisers;
- A mandated restriction on investment in structured notes to 30% of a member’s portfolio with a maximum of 20% per issuer;
- A restriction on those permitted to give advice in relation to investment selection to advisers authorised to give investment advice via MIFID or equivalent regime. For clarity and from discussions with the regulator, we understand that a licence to advise on insurance products will not be considered an equivalent regime; and
- A requirement that Pension Trustees obtain and maintain information about the fitness and propriety of investment advisers selected by clients.
From the consultation process, we understand that the Regulator has experienced a number of complaints in relation to pensions and these changes are intended to address these issues.”

*****************************************

Whilst this is an enormous step in the right direction for Malta, they are not the only country offering QROPS and therefore here at Pension Life we are calling for these regulations to be applied worldwide.

The lists here show that there are 28 other countries offering QROPS schemes. I can’t help but feel that unregulated (for investments) advisory firms will just change countries and continue to offer unregulated investment advice to innocent victims – but using QROPS in other jurisdictions.

Furthermore the decision has been made and announced, but will not come into place until 2nd July. That is nine weeks away. That’s 45 working days, 63 if they work weekends, that the unregulated advisers have to slog their guts out and get as many new “clients” to transfer their hard-earned funds – and invest them into unregulated, high risk, toxic investments. This may be the last opportunity to earn huge commissions in Malta. Then I guess these firms can have a wee holiday until they decide how best to alter the way they work.

STM’s letter goes on to state:

“Going forward we will need to fill the advice gap that is created and it occurs to us that there are two possible options for advisers going forward:

a) The adviser upgrades the license to become a regulated Investment Adviser; or

b) The investment is selected through a Discretionary Fund Manager which is a regulated Investment Manager”

What worries me is that the advisers with only an insurance license will be able to go on to become regulated, “upgraded” as the letter states, to fill the gap, so the process may be made easier for them.
- In response to the four changes reported by STM, I can see no mention of their past failures on a grand scale to carry out even the most basic due diligence on advisers or investments. STM has said nothing about the disastrous consequences of its own negligence – particularly in the case of the Trafalgar Multi Asset Fund;
- A restriction on investment in structured notes to 30% of a member’s portfolio with a maximum of 20% per issuer is still way too high – about 30% too high (and what about UCIS funds?);
- Restrictions on those permitted to give investment advice will need to be firmly policed. Firms with only an insurance license will inevitably try to continue as before. How will this be reported? And what action will be taken if trustees continue to accept dealing instructions from firms with no investment license? (A slap on the wrist with a soggy kipper?); and
- How will Pension Trustees decide whether investment advisers are fit and proper? One man’s fit and proper could be another man’s dodgy dealer.
One Pension Trustee in Malta told me recently that a grave concern of the industry is that firms who abide by the letter of the changes will lose out to firms that ignore them. This will set up an unequal competitive edge for those who interpret the new regulations more “loosely”. So, to make sure this new regime doesn’t end up as a bag of chocolate balls, the Maltese regulator has got to keep on his toes.

*****************************

As always, Pension Life would like to remind you that if you are planning to transfer any pension funds, make sure that you are transferring into a legitimate regulated scheme. Get all the information in writing and get a third party to double check the details.

FOLLOW PENSION LIFE ON TWITTER TO KEEP UP WITH ALL THINGS PENSION RELATED, GOOD AND BAD.
May 1, 2018