Rogue financiers are swindling millions of people including expats in Spain, out of their retirement funds thanks to their ability to move their operations abroad while still having UK recognised listings.
While many financiers are recognised by the Qualified Recognised Overseas Pension Schemes (QROPS), they bypass tighter UK regulations by operating their services abroad. However, they can still benefit from having an official listing with Inland Revenue.
The scheme works by convincing people to move their retirement nest eggs into foreign funds. The financiers tell their customers that this is safe as British authorities still recognise the money. However, an investigation has found that in some cases, money is actually being used in high-risk investments that give the scammers huge commissions. The investigation also found that savers have lost up to £10 Billion through the scheme, despite the funds being registered with the Pensions Regulator and HMRC.
While the government has added new security measures and tougher rules to protect pensions in British based schemes, there is less legislation if the scammers move their operations overseas. This means financiers can levy massive commissions and use cold-calling tactics, which are outlawed in the UK.
Legal Action Against Costa Blanca Firm
One of the companies under scrutiny is Continental Wealth Management in Costa Blanca. The firm which was founded by Darren Kirby currently faces a £2.5 million lawsuit after pension pots were used in high-risk and complex products meant only for professional investors. Scammers then commanded massive commissions from their clients. Furthermore, any customer trying to withdraw their money from the scheme meant they faced crippling exit fees.
Many people have reported losing almost all of their life savings or retirement nest eggs by investing in such schemes that are run by scammers with no financial qualifications.
In the case of Continental Wealth Management, the sole director of the company Jody Smart, had a salary of £122,000 per year, despite having no financial background or accreditations.
In 2016, the former model made a guest appearance on the Channel 5 TV show appropriately named ‘How the Other Half Live’, just prior to her company going bust. As a result, many of the firms Spain-based expat pensioners lost most of their retirement savings.
Both Smart and Kirby now face legal action for £2.5 million with claims of aggravated fraud, belonging to a criminal organisation and fake accounting.
It is crucial for people who are considering investing their pension pots to know that having an HMRC listing does not necessarily give the finance company any credibility. Investors may have an HMRC listing, but may have no financial qualifications or experience, putting their money at significant risk.
Despite HMRC's efforts to combat such pension scams, it is ultimately down to the investor to make sure they act with due diligence by thoroughly researching the legitimacy of the firm and making sure that the scheme fulfils their investment needs.
The UK Pensions Regulator has published a guide on how to spot a pension scam, which you can find at https://www.thepensionsregulator.gov.uk/en/pension-scams