There are more advisers participating in this potentially lucrative market and there has been a blurring of the lines between what is a strict pension transfer from the UK to NZ versus the provision of advice around the applicability or otherwise, of transferring the pension to New Zealand.
Competitive pressure amongst product suppliers has resulted in many NZ QROPS becoming too flexible and not undertaking sufficient checks, thereby potentially permitting the investor to have access to their funds earlier than what the UK regulations permit. This could potentially result in a taxation liability being incurred by the investor. Additionally it is important that scheme administrators are sufficiently knowledgeable of UK pension regulations to ensure that the recipient scheme adheres to HMRC’s expectations around the administration of funds and ensures compliance with the appropriate reporting requirements.
The industry has taken pro-active steps to rectify the issue and develop a voluntary code for both product suppliers and advisers who participate in the QROPS space. A recent meeting of QROPS suppliers saw agreement reached around the need for the voluntary code. Strategi will have this code available for discussion in coming weeks. Strategi is currently developing Best Practice standards relating to pension transfers and advice associated with QROPS and will have available in May via its sister company –Strategi Institute Ltd - a two day QROPS course that will fulfil the requirements of Code Standard 14 relating to “An Authorised Financial Adviser must have the competence, knowledge and skills to provide that service.”
David Greenslade, the Managing Director of Strategi Ltd, believes this voluntary code and training course is a sign of the emerging new professionalism within the industry. When the wider industry realises there is a potential issue with a sub-sector of products or services, it takes pro-active steps to rectify things without having to wait for the regulator or government to initiate change. This bodes well for the industry in the future according to Greenslade.
