UK expats warned again over continuing pension scams

Published:  29 Jan at 6 PM
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The UK former chancellor’s pension freedom reforms are still being taken advantage of by pension scammers in spite of endless warnings.

Chairman of the government’s pensions committee MP Frank Field is warning the so-far toothless defences against fraud are still allowing scammers to take full advantage of UK pensioners at home and abroad. ‘It’s a tragedy for those who’ve fallen for these crooks’, he added. The reforms gave retirees the freedom to invest anywhere and in anything, opening the floodgates for fraudsters to promote bogus products claiming huge returns through dodgy schemes such as overseas hotel developments, rare earth metals, storage units and much more.

The hard truth is that the scammers simply take the money and spend it, often stringing their investors along with other fancy schemes. As a result, hardly any of the cash stolen is ever recovered, leaving retirees at home and overseas without their entire pension pots. Many UK-domiciled pensioners as well as British expat retirees are too embarrassed to even report their losses, and there’s little that regulators seem to be able to do except release warning after warning. Representatives of regular investment firms are insisting there’s no shame in admitting being the victim of such scams, as the crooks are clever enough not to be exposed until it’s too late and the cash has disappeared.

One recent fraudulent scheme focused on steel plant workers in the Welsh city of Port Talbot who’d been told their retirement scheme was about to change to their disadvantage. The scammers moved in, targeting a good number of worried workers and persuading them to switch their life savings to high-risk investments. According to Director of Action Fraud Pauline Smith, the consequences to victims can be devastating, quoting another instance involving 245 victims persuaded to invest in fake schemes. Although the scammers and their methodology have been identified, no arrests have been made.

British expat pensioners living in popular continental retirement destinations are at even more risk of being scammed by fraudulent independent financial advisers touting a variety of so-called investments. Almost never operating legally within their selected country, these crooks assure their victims they’re legal as well as registered with the UK financial authority, sucking expats into totally unsuitable products by blatant mis-selling. These products, usually offered by offshore-based, household name insurance companies, pay huge commissions to the mostly-illegally operating IFAs as well as charging maintenance fees totalling more than the so-called investments generate.

Perhaps the most blatant investment scandal to date took place in 2013, when a number of unlicensed IFAs working with expat retirees in Asia pushed investments in Australia-based LM Investment right up until the company collapsed, leaving 12,000 expatriate investors bearing total losses of Au$750 million, none of which has been recovered. Expat IFA commissions immediately prior to the collapse were huge and it’s impossible that those profiting were unaware of LMIM’s imminent demise as concerned financial professionals had been reporting their fears online for several years. Expats living overseas are now being warned to avoid investing with any IFA, however well they present themselves.
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