Spain still hub for expat financial fraud

Published:  12 Aug at 6 PM
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Despite all the recent publicity about unlicensed, unqualified IFAs scamming expats out of their savings, fraudsters are still targeting Brit retirees in Spain.

A warning from Britain’s Financial Conduct Authority about the growing trend of pension scamming by unqualified IFAs overseas has highlighted a number of incidents in Spain. The danger of losing a lifetime's worth of savings has escalated since the change in UK law made it possible for savers to access their pension pots at age 55.

Expats in popular Spanish retirement destinations are at particular risk of pension liberation scams in which fraudsters approach unsuspecting victims and persuade them to withdraw funds from their UK pension schemes. One unlucky would-be retiree in his early 50s was told by a local IFA that he could withdraw half of his pension pot tax-free in order to buy a property.The fraudulent adviser didn’t mention that withdrawals before the age of 55 aren’t permitted, and his unfortunate victim is now being pursued by HMRC for 55 per cent of the amount transferred. As a result, his early retirement is now just a dream.

According to an organisation set up for pension scam victims, many thousands of Brits overseas are being targeted by unscrupulous fraudsters. Worst of all are the so-called offshore funds which lie at the heart of pension scamming and pension liberation fraud. IFAs promise unrealistically high returns for money invested, then shift the cash into trusts held offshore by untraceable companies.

Terms used by scammers to part retirees from their savings include ‘legal loophole’, used to persuade those under the age of 55 to access their pension pot tax free. The ‘legal loophole’ is a fabrication. ‘Sophisticated investor’ is a term aimed at charming a ‘mark’ into taking on an unregulated investment with no compensation scheme. ‘Free transfer’ is another lie, as such doesn’t now exist since the new rule that investors must pay for advice, at least in the UK. High transfer and administration charges are common, as are the equally high commission rates paid to pension scammers by offshore financial companies.
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