Holborn Assets Ltd will work with the UK’s Financial Conduct Authority to ensure that it is soon again able to handle pension transfers, including those going to overseas pension schemes, company founder and group chief executive Robert Parker has vowed.
“We believe that the FCA are as keen as we are to reach a solution to get the right advice to the expat market, and to this end, we are working closely with them,” Parker told International Investment on Wednesday.
Parker’s comments came in response to the news that the FCA had ordered Holborn Assets, which is based in Dubai but which has operations in the UK as well as South Africa, to suspend all pension transfer business until it has proved to the FCA that it meets certain requirements.
“What is important for me, as a shareholder in Holborn Assets UK Ltd [the UK-based outpost of Dubai-based Holborn Assets] is to know that HAUK are totally committed to operating in the UK defined benefit and defined contribution pension transfer market for the long term, and that it is fully cooperating with the FCA to ensure that it meets the highest standards of performance and is delivering excellent outcomes for its clients,” said Parker.
According to Parker, the FCA’s action only applies to defined benefit transfer advice and transfers, and does not mean that any of the company’s other businesses have been suspended or closed.
Holborn’s UK operations are headed up by its UK-based managing director and sole director, Chris Wicks, who retains executive control of this business and reports to the parent Holborn Assets entity’s shareholders, including Parker.
As reported, the UK arm of the deVere Group, also based in Dubai, said in February that it had agreed to discontinue providing third-party entities with transfer value analysis reports used in facilitating the overseas transfers of defined-benefit pensions, in response to FCA concerns.
Today, Parker said it was his understanding that as many as “nine or 10 companies in the UK have thus far been suspended from giving advice on defined benefit pension transfers introduced by [overseas] financial advisers”, as part of a general “closing in” by the FCA on the overseas pension transfer industry, which has been acknowledged to be taking place in the wake of a raft of reported scams and consumer complaints.
Qualifying recognised pension schemes (QROPS), now referred to by HM Revenue & Customs as simply recognised pension schemes (ROPS), have been at the centre of the FCA’s attention, owing, it’s said, to the growing number of complaints that have been pouring in since new pension freedoms enabled pension scammers to take advantage of more people than ever.
The problem, according to Parker, is that the FCA, lacking authority to take action in the overseas markets in which many of the pension scams take place, is focusing on the UK companies that advise on the transfers for the overseas entities – which, in the case of Holborn, is its own UK operation.
“Holborn Assets UK are following the FCA’s requirements to the letter, and fully expect to have the suspension lifted in due course,” he added.
“In the meantime, Holborn Assets UK is 100% open for business, under the direction of managing director Chris Wicks, who is an expert in the pension transfer field.”
Parker says that in Holborn’s efforts to help arrive at a solution, it has “come up with a suggestion that the [overseas pension] trustees contract with the offshore and UK advisers to only accept investment advice given from the UK, and agreed with the international firm – with the understanding that international investors are different from UK investors in such things as currency choices and where they will finally retire, and thus UK advisers often have little if any understanding of the typical expat client’s wishes in such areas”.
The FCA’s action with respect to Holborn Assets UK is posted on the FCA’s website under its company register section, and states that under section 55L of the Financial Services and Markets Act, Holborn Assets in the UK must “immediately cease all regulated activity relating to pension transfer business introduced by overseas advisers”.
It says the ban must stay in place until the company is able to provide independent verification via a “Skilled Person” showing a “robust and compliant advisory process is in place in respect of the pension transfer business introduced by overseas advisers”.
Holborn must also show that it is “adequately identifying and managing its conflicts of interest”, and the so-called skilled person must undertake a review of the firm’s past pension transfer business, including business introduced by both overseas and UK advisers, to see if it has been in compliance with UK regulatory standards.