Thursday, 16 December 2010

QROPS - Changes afoot?

I’m not a betting man but I do like making forecasts. In the next two or three weeks at least one firm of International Financial Advisers will stop using Guernsey for QROPS. Why you may ask?

  • Guernsey is not so good? – sorry, that’s not the reason

  • They prefer New Zealand? – no its not that either

  • Some Guernsey regulations have changed? – Yes, that’s it
The changes offer greater protection to the client!

Let me explain. On the 1st January 2011 new regulations will come into force for all Guernsey QROPS providers. In summary the key points of these new provisions are;

  1. The Guernsey Trustees must keep a copy of the Advisers Justification (advice letter) on file and check that the advice is accurate.

I know at least one well known ‘adviser’ who won’t like that.

  1. The Guernsey Trustee must be satisfied with the investment plan in which the QROPS is invested

The same ‘adviser’ won’t like that either

  1. If the transfer is from a Defined Benefits Scheme (Final Salary Scheme), the trustee must ensure that the client is aware of the comparison in the benefits.

In my opinion this is an excellent requirement and similar to the UK requirement but I know many ‘advisers’ will not

  1. Fees / Commission Disclosure.

Advisers will have to disclose all commissions and fees payable by the client’s scheme. This includes fees to trustees and commission received for pension, financial and investment advice.

I have complained many times that the Financial Services Authority (FSA) doesn’t make this a requirement for its registered advisers passported into Spain. So many advisers are happy to use FSA in their marketing but it should be a compliance organisation. But now the Trustees will become more strict than the FSA!

The predictable ‘advisers’ will not want clients knowing their commissions and in many cases they don’t even accurately declare all the charges.

If you would like a copy of the new regulations, please email me for a copy.

In the next few weeks, you will hear all the excuses

‘After a strategic review………..’
‘Dissatisfied with the service…..’
‘Change in direction…………….’

But the real reason will be that the usual suspects don’t want to disclose commission, don’t want their advice letters checked and have their investment preferences open to criticism.

You need to get your advice from advisers who are open in their disclosure and will be happy to meet the new requirements! I can introduce you to such an adviser if you email me.

I think this is really good news, an exceptional move to let the client know exactly what is happening to their pension plan.