An anti-fraud unit established by the UK government late last year is understood to have turned its attention to QROPS, as concerns over abuse of the pension schemes escalate. International Adviser understands that the Anti Fraud Unit (AFU), which was originally established to investigate pension scams in general, has recently begun to focus more heavily on the overseas pension schemes.
An HMRC spokesperson confirmed the unit exits and said it sits within the Pension Scheme Services department of HM Revenue & Customs. He added that the unit is working closely with the Pensions Regulator and the Financial Services Authority in its investigations.
Geraint Davies, managing director of UK-based IFA firm Montfort International, said he understands HMRC have already had successful “forays” as a result of the AFU’s work in relation to QROPS.
He said: “The focus of investigations will be coming from all directions including behaviour of the ceding scheme, the receiving schemes and the advisers and the members.
“The activities of this unit make it all the more important that advisers and those transferring out schemes and the receiving QROPS carry out stringent due diligence whilst conducting QROPS business and deliver robust checks and sound advice.”
Geraint added that he suspects one of the targets of the AFU’s investigations will be “washout” situations, where a member transfers money out of a scheme in a lump sum a matter of days after transferring it in.
The government’s decision to investigate QROPS reflects its increasing fears that the schemes are open to abuse, ranging from advisers giving inappropriate advice or mis-selling the products, through to the potential use of the vehicles for fraud.