07 January 2020
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Pensions scams by rogue IFAs are costing thousands of pounds to retired expats in Spain, with some savers being forced to return to the UK with nothing only to face demands from the HMRC.
A 66-year-old British expat, named Cassie, is being chased by HMRC after having lost her entire pension pot of €400,000 to a scammer operating in Portugal's Algarve region.
On the advice of defunct wealth management firm Continental Wealth Management (CWM), formerly based in Denia on Spain's Costa Blanca, Cassie transferred her €400k private pension via QROPS in 2015.
Overseas, it is more difficult to judge whether an adviser or introducer is properly authorised and under which jurisdiction they operate"
The HMRC-recognised scheme would allow her to escape UK income tax, typically between 20%-45%, and avoid death taxes.
She refurbished a villa in the Algarve, Portugal, with plans to make a living hosting a retreat for artists and supplemented by her pension.
But her private pension - transferred via QROPS into toxic investments without her knowledge - began to nosedive, forcing her to abandon her villa and retreat to the UK with just €16k salvageable from her €400k investment, local expat newsoutlet Olive Press reports. She now lives out of a mobile home outside Bournemouth.
Financially ruined, she is now being chased by the HMRC for €70,000 tax, owed because she had to return to the UK inside the permissible 5-year double tax treaty and had withdrawn amounts without understanding she'd been scammed. She is just one of many who believed an IFA listing on the regulator's website guaranteed honest service.
The now defunct company, Continental Wealth Management, netted huge commissions on overseas transfers of QROPs, neglecting to inform their clients about a rule which stated those returning to the UK before the end of a five year period would incur swingeing tax bills.
The regulator refuses to recognise victims of such scams, even although their website states scammers' businesses as legal and registered, thus encouraging their use by novice investors.
Margaret Snowdon, chairwoman of the Pensions Scams Industry Group, said that ‘scammers have long targeted expats living in Spain and other territories' due to relaxed regulations.
"Overseas, it is more difficult to judge whether an adviser or introducer is properly authorised and under which jurisdiction they operate. Often there is no UK protection, which makes the cases all the more tragic," she said.
Snowdon said she was pushing for new laws to protect expats from overseas pension scams.
According to the Daily Mail, many thousands of British retirees have lost a total of around 12 billion euros to pension scammers, with the majority being forced unwittingly into poverty and arrears of tax.
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