UK adviser calls for immediate withdrawal of generic pension guide 'misleading' expats

UK IFA Geraint Davies has called on the FCA and the Money Advice Service to either withdraw the generic consumer guides 'Your Pension -it's time to choose' and ‘Your Pension - Your Choices' or issue a revised version over-stamped suitable for UK tax residents only, and issue another version specifically for Overseas Residents. 

The current version is "confusing and even misleading" for those moving overseas or already expats in other countries, Davies argues.  

The managing director of Montfort International said he had counted "tax-free" 51 times in the April 2022 guide which was introduced to assist those approaching retirement, also pointing to copies he had of FCA and FSA documents relating to tax-free without reference to overseas tax residents.

In a letter to the authorities flagging his concerns he said: "These documents are clearly one-hat fits all publications.  They are distributed by pension providers to those who are deemed appropriate to receive, because they are approaching a crucial time in their financial lives. 

"They are known to be distributed to both residents of the UK and to residents of countries where the UK Pension Commencement Lump Sum (PCLS) is known not to be tax-free."  

"You should also note that UK pension providers in their communications and statements to members overseas also reference tax-free.  In effect the customer is being conditioned in their thinking as to how their entitlements will be tax treated.  Could wrong decisions have been made? I suggest so."

He further argued that this was a Consumer Duty issue "as there is in my opinion visible high likelihood of foreseeable harm to consumers.  Indeed, we have seen how tricksters and scammers have used such references as a platform to promote their "superior understanding" of issues facing non-UK tax residents.  This is at the very least deeply concerning.

"Furthermore, within these documents, there is reference to the income tax rates that apply - these guides are incorrect for non-UK tax residents. There is no reference to "You must check the applicable Article in the appropriate Double Tax Agreement and there is no suggestion that for overseas residents this is a seriously complex subject - but there is no reference."

"The resulting consequences are many.  The issues now raised have been studied by my team at Montfort and we would suggest at the very least that the current 'Your Pension - Your Choices' and 'Your Pension - it's time to choose' be immediately withdrawn and be replaced with a UK version and a new one for those resident overseas", he concluded. 

Davies told International Investment: "I have some very concerned  clients; one came from overseas for two reasons, to see an elderly parent and to sort out his pension. He was given a Moneyhelper guidance session that was actually a misguide. The Moneyhelper ‘expert' told my client that he didn't know what rules would apply in the country where my client lived, but if he lived in UK these were his options.  Absolutely valueless.

"My client was just about to proceed based upon the information supplied by Moneyhelper expert, but something told him perhaps he should speak to an IFA, fortunately the IFA recognised how specialist this advice is and referred the client to us.  

"After we discussed with the customer the issues, he was none too pleased and he was very grateful, he had been pulled from the brink. He felt he had wasted a day of his holiday."

Davies added: "It's such a platform for scammers and tricksters. That's really is why we believe all overseas residents who live outside the UK should be considered as vulnerable - its fairly obvious I would have thought.  There are many others with overseas factors who are vulnerable its not just overseas residents.  Some UK residents might be planning to leave UK and they need specialist advice.

"We classify all overseas residents as vulnerable and the sooner this categorisation by the authorities is recognised the better.   We call them FISIC's - Financially Impacted by Some International Checkpoint.  But FISIC's are also those who are nationals of other countries living in a foreign land."