The Qualifying Recognised Overseas Pension Scheme (QROPS) industry seems to be heading down the same rocky road to self-regulation as the British lettings industry.
Advisers on specialist online forums like LinkedIn are extolling the merits of a voluntary code for QROPS advisers.
The idea is that the body running the code will set minimum standards for advising on QROPS so expats looking for an offshore pension can feel confident with the firm they are dealing with.
However, QROPS codes have a patchy history.
Gibraltar has a code of practice for pension providers, but so does Guernsey.
Marketing tool not regulation
Whereas Gibraltar has a clutch of pensions, Guernsey lost more than 300 delisted QROPS in 2012 despite the strides the island’s pension providers took towards self-regulation.
The lettings industry is a good comparison with the QROPS market.
Both have sections of the market that are regulated.
For lettings agents, several professional bodies provide client money protection schemes aimed at safeguarding rents and deposits from rogues for landlords and tenants. Some agents belong to the self-regulated bodies and some do not.
For QROPS, most providers have a financial regulator based in the jurisdiction where they operate, whereas the advisers are regulated in some countries and not in others.
The result is a mish-mash of part-regulated and part-unregulated advice.
The problem is belonging to a self-regulated body becomes a marketing tool and different bodies vie for favour because they benefit from collecting affiliation and other fees from advisers without offering any real benefit to the consumer.
Independent arbitrator
For a regulatory body to work, the consumer must have an independent arbitrator to deal with a complaint which has the teeth to fine and take other sanctions against offending financial advisers.
If the code is just a written document making promises no one has the power to keep, then however well-meaning, the advisers signing up to the code might as well save the money on their ink by not printing up the papers.
The issue for QROPS consumers is access to good advice.
Despite the Financial Conduct Authority in the UK expressly indicating advisers with expat customers should be informed about the QROPS options, too few onshore advisers are well-versed in the complexities of wealth management and retirement planning across borders.
The trouble is consumers do not know this, so do not know to look for a reliable, regulated advisor for information about their QROPS transfers.
I definitely think three people thinking about something random in a chatroom constitutes news. Well done!
The aim of the proposed code of conduct for advisers is to try to offer guidance to people looking for QROPS advice what they should seek from adviser, including some of the questions they should ask. This article talks about codes relating to providers and codes relating to advisers. Wwe are only talking about an advisor code and this is not driven by providing a marketing advantage or the desire to collect affiliation fees. This is driven solely by the desire to bring this area out of the shadows and to try to help people get “good advice”. We can debate what “good advice” looks like and there will be some difference of opinions. At the moment there is no guidance for individuals considering QROPS other than from providers or salesmen who want their money!