Expat Investment Claims for UK expats - Interview
Please read our disclaimer.
Important note: While I am the one publishing this blog post, what follows is the work of another SimplyFI member who has preferred to remain anonymous.
This blog post is quite different from what we usually do: I am interviewing Ed Birkbeck from Expat Investment Claims (EIC) about an important topic that affects many UK expats – offshore pension transfer.
For years, “Independent Financial Advisors” (IFAs) were targeting UK expats to transfer their ‘defined benefits’ (DB) pensions offshore. This rapidly increased beginning April 2015 with the ‘Pension Freedom’ reforms, allowing retirees full flexibility on how to spend it. Lured by massive commission that was not made clear to investors, IFAs would encourage expats into many inappropriate investments that eventually collapsed. Several high profile collapses include Evergreen, Strategic Growth Funds, LM, Premier New Earth, Axiom and Brooklands Trustees, causing massive and permanent loss to the expat’s pension pot. By the time expat realized something was wrong, the original IFA was long gone, leaving the expat lost with nowhere to turn to for help or any legal recourse.
For many years, many expats have been asking around for help to understand the situation they are in, how to untangle the mess and extract their pension back to a regulated environment. Unfortunately, this was a complex situation with no easy outs. Unbeknown to many, a complex contract and charging structure meant huge financial penalties upon exit. However, this was only the beginning. Some IFAs, life insurance companies and pension trustees tried to prevent clients from leaving, utilizing many delaying tactics to ensure maximum extraction of fees from accounts for as long as possible. The simple act of trying to transfer a pension account out (easily achieved within a week elsewhere) would drag on for 6 to 12+ months due to numerous last minute surprise requests (unrelated to any regulatory requirements) and lack of communication. This resulted in many to eventually breaking down and give up in exasperation.
The few that manage to escape have secured their pension but the damage was already done. Furthermore, there was no legal or financial recourse available due to actions by some advisors that resulted in inappropriate pension transfer and unsuitable investments...until now!
Before going further, please read our disclaimer. It should be known that SimplyFi.org has strict guidelines regarding the promotion of any financial product/services, which applies to everyone, including board members. Any personal recommendations are always open for public scrutiny, based on personal experiences/research and any potential conflict of interest must be openly declared. This builds trust among members and allows the community to grow.
To be crystal clear, there is zero financial relationship between ANY SimplyFI board members and EIC, regarding this post and/or services provided by EIC. As usual, readers must not construe this post as legal or financial advice, and we offer no representations or warranty on the correctness of any information herein. Please do further research if thinking of using any information for personal use.
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Now that the formalities are out of the way, let’s get to the exciting interview!
[Anonymous] Ed, welcome to our first ever blog interview. [Ed Birkbeck] Thanks for the opportunity to chat.
[A] We have had a number of phone chats the past few months - what made you reach out to me initially? [EB] I was initially made aware of your group through a Facebook post and someone was asking about pension transfers. There were 2 reasons I made contact.
Firstly, to establish if we could help any of your members get compensation, and secondly, to stop the next client receiving unsuitable, expensive and unregulated advice and becoming a victim of mis-selling by raising awareness of the pitfalls of transferring their pension.
[A] Tell us very briefly about yourself and EIS [EB] I have been involved in offshore financial services for over 20 years, living mainly in Asia. I returned to the UK in January 2017 having lived in the Middle East and Asia since 1996.
I have an MBA from the University of Queensland and CII (Chartered Insurance Institute) qualifications.
[A] Where else have you travelled? What about the UAE where most of our SimplyFI members are based? [EB] I have conducted business in over 80 countries. In my role as Global Sales Director, I did a round the world trip every 3 months. The main markets were Japan, UAE, Singapore, financial centres in Europe, Africa and South America. I have lived in the UAE for many years and visited on countless occasions since 1996. It was a very different place back then. Certainly much cheaper!
I still visit the UAE regularly to meet clients with ongoing and new claims.
[A] Is your background finance? Investing? How did you get into this industry? [EB] I started in offshore financial services in 1996 as an independent financial adviser in Dubai, then moved to South East Asia in early 1998. In 2002 I moved to Australia to do an MBA. I returned to live in Malaysia where I worked as the Global Sales Director for a fund distribution company. I then worked for a fund platform and life insurance company. All roles were involved in the distribution of financial products to financial intermediaries including IFAs, private banks and asset managers.
[A] And how did you come to work with/for EIS? [EB] The company was set up in April 2018 after I saw an advert in a newspaper that stated you could get compensation for losses suffered on SIPPs (Self Invested Personal Pensions) in the UK. I approached about 6 companies to establish whether compensation claims could be done for expats. After doing extensive due diligence the decision was made to partner with Legal Force as they were familiar with handling claims from expats.
[A] Could you describe in more detail the business model of EIC? And more importantly, how would you and EIC be able to help SimplyFI members? [EB] We are a UK FCA-regulated company, partnered with Legal Force, who handles all the claims. They are the engine that drives the claims process. The claims process is established in the UK and all payments are made from the FSCS (Financial Services Compensation Scheme) or ombudsman. The claims are non-litigious, meaning they do not go through courts. The FSCS has set aside GBP375 million to pay out claims.
Expat Investment Claims seeks those expats who have been adversely affected by transferring their pension. Once they have been referred to Legal Force, the clients are contacted by Legal Force who run them through the terms and conditions of making a claim according to the UK regulations. If the client decides to proceed they are sent a pack to complete which includes a letter of authority which allows Legal Force to act on their behalf. On receipt of the signed pack, Legal Force then contact the various parties involved in the pension transfer including the pension administrator, Life Company and ceding scheme. The companies involved are obliged to respond with client case information within 40 working days. Once all the information is gathered, the case is assessed and grounds for a claim are established. If there are grounds for a claim, the case is submitted to the Financial Services Compensation Scheme or Financial ombudsman, depending on the circumstances. It is then a case of waiting for a ruling to be made and compensation to be paid. Please be warned it can take up to a year, although some have paid out in the shorter time frame.
As a UK pension is a regulated investment product, all British citizens are covered under the Financial Services Marketing Act, regardless of where they are resident in the world.
[A] Of all the pension transfers, what % of them do you suspect are “inappropriate”? [EB] There were 120,000 pensions transferred to QROPS (Qualifying Recognised Overseas Pension Scheme) in the international market (according to HMRC website) and another 35,000 SIPPs. We estimate that 35% were done in the Middle East, so approximately 40,000 clients. Geographically, it our largest market. The main reason is a lack of regulation and the sheer numbers of rogue advisers. We can potentially make claims for all clients who have transferred pensions into high cost, high commission paying life insurance bonds (RL360, Old Mutual, Friends Provident, etc) as we can prove they are commission generating sales and not best advice. Also many clients have been invested in fraudulent funds that now have little or no value (LM, Premier New Earth, Axiom, etc) and structured notes.
[A] How can people tell if they may have a claims case with their offshore pension transfer? What are they looking for? [EB] The main thing is: have they lost money? From there we can establish why. The following reasons are grounds for a claim:
Unsuitable underlying funds
Charges and on-going fees were not disclosed
Use of a life company bond to generate commission
Non-disclosure of product information, ie no risk report which is required by the regulations
Structured notes, locked up funds with no or little value.
Did the client understand the product? Unlikely as most advisers don’t!
Any clients who used Brooklands can claim as they have been placed in default by FSCS
Any clients with pensions administered by: STM, Sovereign, Brooklands (now Heritage), Momentum, Castle Trust, Boal and Co, Bourse, Concept please contact us as they are the main names that come up repeatedly.
Structured notes and Fund groups that have been commonly used that are now worthless: Premier New Earth, Axiom, Strategic Growth, LM, Mansion, EEA, Leonteq/EFG notes, Belvedere, Kijani, Brazilian forestry, car parking spaces, Harlequin, Foreign Hotel rooms, Agar Oil, storage units and many more
[A] Why would SimplyFi members use your services as opposed to another claim management company? [EB] A few reasons off the top of my head:
1. Extensive knowledge and understanding of the international financial services market; 2. Proof of successful claims; and 3. We have consultants in the UAE who they can meet to discuss the process.
(Editor’s notes – a sample of a successful claim by a UAE expat was provided to the SimplyFI board to view. Names were withheld for confidentiality)
[A] As you already know, many members have had very bad experience with their pension transfer and savings/investments, so probably be very sceptical of offers for help. What assurance do you have for them and why should they trust EIC? [EB] There are several reasons:
1. We are fully regulated. 2. Claims are not litigious; they are paid by the FSCS and Ombudsman (both government agencies). 3. We do not ask for upfront payment to fund your claim (or ever). 4. We do not promise your claim will be successful. We will tell you if there are no grounds for a claim; and 5. It will not cost you anything if your claim is not successful so you have nothing to lose.
[A] Who are you regulated by? [EB] Expat Investment Claims is a trading name of Legal Force Limited (4 Pedlars Walk, Ringwood, Hampshire, BH24 1EZ).
Legal Force Limited is registered in England (Company No 09193397) and is regulated by The Financial Conduct Authority (FCA) with authorisation number FRN 832751.
[A] What is the fees structure charged by EIC? [EB] We charge the industry standard of 25% (plus VAT) of all successful claims. However, a special deal for SimplyFI members – only 20% plus vat of successful claim with no upfront payment.
(Editor’s note: If you do avail the services of EIC, don’t forget to mention SimplyFI. A short message to any FB admin is also appreciated)
[A] Are people able to hire services on an hourly fees based instead of a percentage of settlement? [EB]Yes, if they contact a lawyer. Far more expensive and if their claim is unsuccessful they will still have to pay.
[A] Approximately how long does it take from initial enquiry to settlement of claims? [EB] 6 months plus so it’s a good idea to start the process ASAP.
[A] And happens if any member has a problem or complaint? [EB] Raise the complaint with EIC first and hopefully it can be resolved. If still unhappy, they can raise the matter directly with the FCA.
[A] With regards to their pension claims, what kind of information would people have to provide? [EB] The more information they can provide the better. You would be amazed how many people have no information.
(Note: This doesn’t surprise me one bit! Many expat have come seeking help to understand the mess they are in. Often, basic and critical information was never offered, provided or such information was even purposely hidden from them)
Here’s a list of things that will help with the investigation:
Name of pension administrator/trust,
Policy number, life company,
Extent of losses,
National insurance number,
Address when transfer was done.
If clients have policy documents and any original paperwork then that can speed up the process.
[A] If some of the paperwork was never provided or given by advisors, what can people do? [EB] It is still possible to make a claim if the basics are provided.
[A] Do you only assist UK nationals with miss-sold pension? [EB] Yes.
[A] What would you tell someone who is not a UK national who believes they were mis-sold a financial scheme? [EB] Unfortunately, we can only deal with pensions as they are UK regulated. There has to be a regulated party to claim against.
[A] What’s the basic process if people are interested in finding out more? [EB] Contact us by email on email@example.com or through website.
[A] Are there anything else readers should know about you or expatinvestmentclaims.com? [EB] We are obliged to inform people they can make a claim through the FSCS and do not need to use a claims management company. All I can say is that I wish them the best of luck. Yes, it will not cost them anything but is a long and complicated process. We have many clients who have done the process themselves and lost who can come to us to appeal and been successful.
[A] I think that’s all the questions I have for you. Thank you for being our first blog interviewee. [EB] It’s been great chatting with you. We look forward to hearing from some SimplyFI members and will do our best to support them.
(Note: This is a new and interesting development for expats – the ability to seek compensation for their pension account that was sometimes placed into inappropriate investments by some advisors.
Recently, some jurisdictions like Malta have started cracking down on inappropriate offshore pension transfers. New legislations that have come into effect since July 1, 2019 have forced many pension trustees to scrutinise investments a lot more and required “IFAs” to have higher qualifications before being allowed access to pension accounts. This will hopefully reduce the number of inappropriate offshore pension transfers moving forward.
Although this news is welcomed, it is hoped that other jurisdictions join Malta with tighter regulations to fight against such practices.