Is it safe?

DBL28

Our IFA advised us to stop our personal pension policy and transfer the funds to an independent pension plan. The policy provider has refused to transfer the funds as they say the pension plan is unregulated by the HMRC. Should we be worried? Where can we get advice from as to the best way to proceed. Our IFA has worked with us for over 10 years and we've never had any concerns before.

dunstonh

Our IFA advised us to stop our personal pension policy and transfer the funds to an independent pension plan.

Is this person actually an IFA? Check the FSA register. There are a lot of scams out there from people pretending to be advisers.

The policy provider has refused to transfer the funds as they say the pension plan is unregulated by the HMRC. Should we be worried?

No as the pension transfer has been stopped. However, I would seriously worry about the validity of this person you call an IFA. Maybe it is an ex IFA who is no longer regulated. It is highly unlikely any IFA would recommend such a transaction to a typical UK retail consumer. You would have to be of high net worth, have specialist needs and objectives and a good understanding of the issue. Is that you?

Where can we get advice from as to the best way to proceed. Our IFA has worked with us for over 10 years and we've never had any concerns before.

Speak to another IFA and outline your concerns. Or continue as you have started here by giving us the information and let us check.

Perhaps it is an ex adviser (The retail distribution review which came into play in January improved qualifications and standards and around 30% of advisers left regulated advice at that point). This happens when the first qualifications came in during the 90s. The dodgy ones moved to offshore or unregulated schemes. The increasing of standards further could well see a smaller scale repeat with the failures being culled.

srcandas

DBL28 wrote: »

The policy provider has refused to transfer the funds as they say the pension plan is unregulated by the HMRC.

Many of us grumble when the system lets us down but in this case well done the system, the provider and HMRC :T:T:T

Aegis

DBL28 wrote: »

Our IFA advised us to stop our personal pension policy and transfer the funds to an independent pension plan. The policy provider has refused to transfer the funds as they say the pension plan is unregulated by the HMRC. Should we be worried? Where can we get advice from as to the best way to proceed. Our IFA has worked with us for over 10 years and we've never had any concerns before.

What was the pension you were advised to transfer to, and was there a specific investment recommendation made in addition to the transfer that you would be ok to mention on here?

mania112

DBL28 wrote: »

Our IFA advised us to stop our personal pension policy and transfer the funds to an independent pension plan.

a what?

DBL28 wrote: »

The policy provider has refused to transfer the funds as they say the pension plan is unregulated by the HMRC. Should we be worried?

Good on them. Thanks to your provider (and not your 'IFA') no, you should not be worried, seems like it won't go through.

Having said that, I seem to remember a provider (nameless) who called me because a client of ours had been contacted by another firm to proceed with a similar thing and they told me the client had be written to warning them it was a pension liberation scheme, but THEY STILL PROCESSED THE TRANSFER.

So beware.

DBL28 wrote: »

Where can we get advice from as to the best way to proceed.

Simply don't proceed is the only advice you need.

DBL28 wrote: »

Our IFA has worked with us for over 10 years and we've never had any concerns before.

I doubt this is a true IFA - see if you can find him/her here: http://www.fsa.gov.uk/register/home.do

In any case, it's time to find a decent IFA, they can be found here: https://www.unbiased.co.uk

gadgetmind

mania112 wrote: »

I doubt this is a true IFA - see if you can find him/her here: http://www.fsa.gov.uk/register/home.do

I had a real IFA (looked him up, all legit) advise me to move my entire SIPP to him so he could invest it in mezzanine loans to property developers.

When I suggested that I'd rather keep my property exposure below 5% - max 10% - he lost interest, but did give me parting advice that no-one ever made money from equities.

I'm now 100% DIY and for good reason!

bigfreddiel

gadgetmind wrote: »

When I suggested that I'd rather keep my property exposure below 5% - max 10% - he lost interest,

i had similar experience - the ifa wanted tomove my s&s isa to his platform - wanted to charge 4% - and would not explain his investment strategy - when I asked for more information on charges and strategy he lost interest and never got back to me - that made me learn more and now i'm another diyer

fj

jamesd

Given that the transfer is blocked it's likely that you have been saved from a very serious loss-making problem. Hard to say more without knowing the specifics but given the description of events it would be good to see whether the person still is or is not an IFA and if still an IFA complain to either their network or the FCA in the hope that they can prevent losses for more of the customers who will undoubtedly be involved.

Please don't simply drop this, some providers of pension or other investments might not block moves and many others could lose significant amounts of money.

dunstonh

gadgetmind wrote: »

I had a real IFA (looked him up, all legit) advise me to move my entire SIPP to him so he could invest it in mezzanine loans to property developers.

When I suggested that I'd rather keep my property exposure below 5% - max 10% - he lost interest, but did give me parting advice that no-one ever made money from equities.

I'm now 100% DIY and for good reason!

In my experience,there is a very small subset of advisers who seem to believe they have to recommend weird and unusual to make them stand out from the rest. More frequently it tends to be higher qualified ones who are directly authorised (i.e. do their own compliance in house and not external - so no-one to catch them doing it). These types will frequently slag off conventional options and advisers that use them.

Arch Cru, for example, was mostly sold by directly authorised chartered financial planners. It does seem that when a small number get higher qualifications, they lose a sense of reality and common sense. (please dont read that as being against higher qualifications - it is only a small number we are talking about).

In reality, conventional works. it may be boring but it will still be there when you need it. If yout get a recommendation that is unusual or weird then you should be on guard.

redbuzzard

dunstonh wrote: »

Arch Cru, for example, was mostly sold by directly authorised chartered financial planners. It does seem that when a small number get higher qualifications, they lose a sense of reality and common sense. (please dont read that as being against higher qualifications - it is only a small number we are talking about).

But weren't the Arch Cru Funds FSA regulated OEICS, and managed my Capita? And even classed as "cautious managed" for that that is worth?

How would a normal investor, or an IFA for that matter, have known that they should stay clear? I don't think the performance was "too good to be true" when most of the money invested?

ISTR that one criticism was that how the funds worked was not transparent. But that applies now to some very large and widely held AR style funds doesn't it?

I'm not very familiar with the history BTW - I am genuinely interested.

Clearly, if clients were being advised to put all or a large proportion of their investments into them, then that may well be grounds for criticism.

dunstonh wrote: »

In reality, conventional works. it may be boring but it will still be there when you need it. If you get a recommendation that is unusual or weird then you should be on guard.

Completely agree. The most important thing for most people is to put some money by, as boringly as possible, and to ignore any ideas that there is a reliable way to get rich quick.

jamesd

They were regulated but at least six places with oversight or regulatory responsibility seemed not to do an adequate job: Capita, Arch, Cru, HSBC, the Guernsey stock market regulator and the FSA. Then in some IFA cases an excessive proportion of total investments were placed in the funds, much more than was appropriate for the non-standard investment diversification role they could have been used to deliver.

The definitions of the sectors weren't particularly helpful in assessing what the risk levels of funds in them were. They still have substantial limitations for that but it's somewhat moot in this case, for the funds were always high risk due to the nature of the investments used. It's only as part of diversification that they could reduce overall portfolio risk.

I used one of the funds here as part of diversification examples. Got a better demonstration of that than I wanted to provide, though the diversification still worked to achieve the targets of that diversification for the combination: lower overall volatility than the FTSE with returns greater than cash or mortgage interest rates.

You're right that some of the investments were not sufficiently transparent. One that I didn't know about, in a shipping (ship owning) company, would have caused me to react with alarm based on the amount (insufficient diversification, a quarter of the fund value!) and market timing involved (buying ships in a market boom is how shipping firms go bankrupt). Another proposal that I did learn of troubled me and was a factor in me not mentioning the company again: investing in a particular way with particular large amounts to further the religious beliefs of one of those involved in marketing the funds. That suggested to me that the corporate governance was not trustworthy, based on roles of individuals, amounts and reasons involved.