Are L&G being a bit extreme?!

captain_jep

I’m currently in the process of consolidating my DC pensions into my SIPP.

I have two smallish pensions with L&G. As part of their due diligence they ask where you will be investing the funds. I answered a Vanguard ETF (VHVG).

Apparently this raises 2 flags
a) This is not a low risk scheme (not “a public service scheme, an authorised master trust or an authorised collective defined contribution pension scheme”)
b) Is domiciled in Ireland- which has a “risk level” of amber.

If I wish to proceed with the transfers I am now supposed to attend a telephone interview to ensure I am not being scammed.

I don’t remember it being anywhere as difficult with the other transfers?

Has anyone else had similar problems?

dunstonh

I have two smallish pensions with L&G. As part of their due diligence they ask where you will be investing the funds. I answered a Vanguard ETF (VHVG).
Apparently this raises 2 flags
a) This is not a low risk scheme (not “a public service scheme, an authorised master trust or an authorised collective defined contribution pension scheme”)
b) Is domiciled in Ireland- which has a “risk level” of amber.

The receiving scheme would also have raised a flag as it has to declare to the ceding scheme whether it allows unregulated investments or overseas investments.  Overseas is the domicile rather than the type of asset in the fund.

By default, a SIPP would trigger an amber flag on that basis.   The fact you have confirmed you are using a direct asset without FSCS protection domiciled outside of the UK is another flag.

If I wish to proceed with the transfers I am now supposed to attend a telephone interview to ensure I am not being scammed.

The moneyhelper interview means you have not satisfied them that the transaction is safe or suitable or you are not using a mainstream provider.   Maybe the receiving scheme isn't using ORIGO (if both sides use Origo then its generally considered safer as only mainstream schemes use origo)

I don’t remember it being anywhere as difficult with the other transfers?

These rules came in around 18 months ago.     Without knowing what these other transfers were from and to, we cannot comment.

Has anyone else had similar problems?

yes

leosayer

They're doing a bit of due diligence which is their job as trustees of your current scheme to protect themselves and you. It's risk mitigation on their part so it is a box-ticking exercise to a certain extent.

Just make sure you have a good story about your own due diligence, expertise and reasons and there will be issues.

Marcon

leosayer said:

Just make sure you have a good story about your own due diligence, expertise and reasons and there will be issues.

Hopefully not...!

OP - frustrating or irritating as you may find this, high quality due diligence from a pension provider could stop someone being scammed out of their life savings. That might not apply to you, but sooner or later it will apply to someone else, so perhaps instead of seeing this as a 'problem' you might just see it as a helpful precaution.

captain_jep

No sorry I still see this as extreme. I’m investing in a Vanguard fund via (in this case) Hargreaves Lansdown. You couldn’t get more mainstream than that.

While I accept that they need to err on the side of caution I would expect that this level of diligence leads to far too many transfers being flagged.

All my other transfers have been in the last 3 months.

Still - it looks like all this does not appear abnormal. Guess I’ll just have to play by the rules then..

artyboy

Marcon said:

leosayer said:

Just make sure you have a good story about your own due diligence, expertise and reasons and there will be issues.

Hopefully not...!

OP - frustrating or irritating as you may find this, high quality due diligence from a pension provider could stop someone being scammed out of their life savings. That might not apply to you, but sooner or later it will apply to someone else, so perhaps instead of seeing this as a 'problem' you might just see it as a helpful precaution.

Well that's a stretch. Having been caught by the 'overseas investments' yellow flag before, this is a lot more to do with a@se covering rather than meaningful due diligence.

Especially where the domicile of those investments is in a well established location for funds, and one that is considered to have equivalent standards of financial regulation to the UK (well, that's the KYC/financial crime perspective anyway...). 

Rules that are badly drafted and then over-zealously applied don't add up to high quality due diligence!

dunstonh

No sorry I still see this as extreme. I’m investing in a Vanguard fund via (in this case) Hargreaves Lansdown. You couldn’t get more mainstream than that.

You have confirmed you are using non-mainstream investments domiciled outside of the UK.  ETFs are fine, but they are not considered mainstream. Only a very small proportion of people use them in their pensions. As there is no FSCS protection, they are classed as higher risk.

While I accept that they need to err on the side of caution I would expect that this level of diligence leads to far too many transfers being flagged.

Not really.  I have had one flagged in the last 18 months.  That one I was frustrated because the scheme wouldn't use sensible discretion (which they are allowed to do), but that is normal within the auto-enrolment schemes.  They are the worst typically.   Remember that the staff member at L&G probably hasn't heard of Vanguard and HL doesn't appear to be whitelisted on their systems.   So, I understand why, even though I would be frustrated in your shoes.

Marcon

artyboy said:

Marcon said:

leosayer said:

Just make sure you have a good story about your own due diligence, expertise and reasons and there will be issues.

Hopefully not...!

OP - frustrating or irritating as you may find this, high quality due diligence from a pension provider could stop someone being scammed out of their life savings. That might not apply to you, but sooner or later it will apply to someone else, so perhaps instead of seeing this as a 'problem' you might just see it as a helpful precaution.

Well that's a stretch. Having been caught by the 'overseas investments' yellow flag before, this is a lot more to do with a@se covering rather than meaningful due diligence.

Especially where the domicile of those investments is in a well established location for funds, and one that is considered to have equivalent standards of financial regulation to the UK (well, that's the KYC/financial crime perspective anyway...). 

Rules that are badly drafted and then over-zealously applied don't add up to high quality due diligence!

Better than no rules and no accountability...and as OP has indicated, they are using assets which are classed as high risk, so not sure why you are so dismissive.

artyboy

Marcon said:

artyboy said:

Marcon said:

leosayer said:

Just make sure you have a good story about your own due diligence, expertise and reasons and there will be issues.

Hopefully not...!

OP - frustrating or irritating as you may find this, high quality due diligence from a pension provider could stop someone being scammed out of their life savings. That might not apply to you, but sooner or later it will apply to someone else, so perhaps instead of seeing this as a 'problem' you might just see it as a helpful precaution.

Well that's a stretch. Having been caught by the 'overseas investments' yellow flag before, this is a lot more to do with a@se covering rather than meaningful due diligence.

Especially where the domicile of those investments is in a well established location for funds, and one that is considered to have equivalent standards of financial regulation to the UK (well, that's the KYC/financial crime perspective anyway...). 

Rules that are badly drafted and then over-zealously applied don't add up to high quality due diligence!

Better than no rules and no accountability...and as OP has indicated, they are using assets which are classed as high risk, so not sure why you are so dismissive.

Better something bad than nothing at all? Nope, I've spent my entire career in financial services (not, I say upfront on pensions) and I'm far too familiar with being on the receiving end of bad regulations, and worse still, bad implementation of them. 

It creates a false sense of security for the customer, and it diverts resources and energy from managing actual risk, and towards controlling a misguided perception of risk. And there is real risk - banks and financial institutions can behave badly.

And as you'll see from my post, my point was more focused on the overseas investments amber flag (which I maintain is a bad rule, often badly implemented). I am not enough of an expert to substantively comment on the ETF point, but if we accept that an all equity fund would be high risk in the same way as an all equity ETF, the additional risk delta is presumably down to FSCS protection. And does that really carry the same significance for investments as it does for savings? 

I'm genuinely interested in this one as it would seem to focus more on maladministration as anything else, so less of a safety net as it is seen for deposits.

So no, I'm not being dismissive, if I were to make this transfer between mainstream SIPP providers, it would go through without issue. Hell, not even WTW made me go through this level of nannying. 

squirrelpie

You could always tell them something they find acceptable, and then later change your mind.

Albermarle

squirrelpie said:

You could always tell them something they find acceptable, and then later change your mind.

I was going to suggest telling them you had changed your mind, and were now planning on investing in Vanguard Life Strategy 60 . You could not get more mainstream than that.