The Government says it will not weaken the current advice requirement on overseas pension transfers in a response to a consultation published today.
The consultation called for evidence on whether the requirement for overseas residents to take advice from a FCA-adviser should be kept or removed.
It also asked if overseas members should be allowed to take advice that meets an equal minimum standard in their country of residence.
The consultation closed in December 2016 and received 52 responses from a range of small and large adviser firms.
According to the Government, the evidence received did not indicate the requirement to take financial advice prevents overseas residents from transferring their pensions out of the UK.
More than half of the consultation respondents supported retaining the current advice requirement, although some acknowledged the additional challenges faced by overseas members.
Approximately one quarter of respondents expressed a preference for an easing of the rules that would allow a non-UK resident to use an overseas financial adviser instead of one in the UK.
Of those remaining, most did not give support for any one of the options. Only two respondents suggested that overseas members should not be required to take advice.
Given the evidence the Government says: “Following consideration of these points and the responses to the call for evidence, we are largely satisfied that the advice requirement is working as intended for overseas transfers by offering an effective level of protection for members.
“We therefore intend to retain the advice requirement for overseas transfers at the present time since the gains provided in consumer protection outweigh the issues faced by some members with delays in the overseas transfer advice process.”
“Easing the advice requirement for transfers of guaranteed pensions to overseas schemes could have been a recipe for disaster. We know a significant number of pension scams involve moving money to vehicles in foreign jurisdictions which often lack the protections available in the UK. Fraudsters would inevitably have seized on any scaling back of the advice requirement to target people with defined benefit pensions and valuable guaranteed annuity rates (GARs).
AJ Bell senior analyst Tom Selby says: “With the ongoing attention being placed by the FCA on defined benefit transfer advice, it would have been odd for HMRC to water down the advice requirement for people transferring to a QROPS.”