Rogue pension and investment advisers preying on expats are rife in popular British retirement destinations like Spain.
With more than 300,000 British residents, Spain tops the list as the favourite place in the sun for expats.
That’s why expats have to watch out for the ‘chiringuitos’ – and in the financial world these are not quirky shanty beach bars but bogus financial advisers out to cheat expats.
Often working in bars and bodegas where expats like to gather – hence their name – these fraudsters talk up their qualifications and experience and offer spectacular investment returns of 8% a year or more to tempt expats to hand over their cash.
As soon as the fraudsters have money from expats they disappear and set up in another bar.
Regulated financial advice in Spain
Spanish financial services are regulated along similar lines to those in Britain.
Only firms and advisers licensed by the CNMV (Comision Nacional del Mercado de Valores) and Bank of Spain, are allowed to advise on pensions and investments. This includes talking about the tax and investment benefits of a Qualifying Recognised Overseas Pension Scheme (QROPS).
Advisers who are not regulated by the two official organisations are outside the investment guarantee fund, which means consumers have no financial protection should the investment fail to perform as billed or if the adviser goes bust.
Chiringuitos often contact their victims by cold-calling or referral from other expats. The referring expats are not generally crooks, but they have signed up for the investment offer and made a profit because the bogus adviser pays them to make the scheme look bona fide.
What makes expats targets for conmen?
The question many conned expats ask is what makes them a target for fraudsters?
The fact is just being an investor increases an expat’s chances of being contacted by a scammer.
The information they need for a cold-call comes from lists of shareholders of public companies, subscriber lists sold by financial magazines and signing up for offers online.
Expats who are contacted by a chiringuito should ask the adviser for information about their supervising body – the CNMV. Do not accept the regulatory information at face value but contact the CNMV personally to check out the details because chiringuitos do tell lies and pose as licensed advisers.
The CNMV also publishes warnings about bogus advisers online.
Further QROPS Information and Guidance
For more information about QROPS and the benefits it provides, download the iExpats QROPS Guide or complete the Get Advice form.
