UK expats in Spain warned to watch out for financial fraudsters

Published:  15 Jul at 6 PM
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In spite of frequent warnings, tales of financial fraud and endless on- and offline articles, rogue pension and investment FAs are still rife in British retirement destinations.

For decades, Spain has been a favourite with British retirees who’ve had enough of the UK’s dreary weather and escalating cost of living. Around 300,000 escapees from the UK are living a new life in the sun and stretching their state pensions to cover expenses. Sadly, this happy band of expats is as much at risk of being cheated out of their life savings as ever before, and it’s not just in Spain, it’s big business on many other expat havens.

Wherever they’re found on the planet, the fraudsters’ favourite hunting grounds are local bars, bodegas, expat clubs and popular expat hangouts. Preying on the undeniable fact that the majority of retirees know very little about the world of finance and even less about investing, the bogus FAs offer spectacular investment returns over fixed terms after boasting about their qualifications and experience in the trade. Mis-selling is the least devastating, is done to get the scammer the highest commission, and is backed by famous-name insurance companies in offshore havens such as the Isle of Man.

If the investor is lucky, he’ll only lose a proportion of his savings, but many fraudsters simply take the cash and move on to the next victim in another bar or even another town. Others invest the client’s cash in bonds known to be high risk, although the client may have insisted on a low-risk investment. The advent of QROPS and pension liberation was a gold-plated gift to these crooks, with many investors losing their entire pension pot.

Spanish regulatory laws applicable to financial services are similar to UK laws, with only FAs who are licensed by the Bank of Spain and the Comision Nacional del Marcade de Valores operating legally. Any unlicensed FA who advises on investments, pensions and QROPS is breaking the law and is outside the country’s investment guarantee fund. The fund gives protection in the case of investments not performing as promised and also if the FA becomes bankrupt.
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