QROPS Overseas Pension Transfer Mis-selling — Claims Guide

What Is a QROPS?

A Qualifying Recognised Overseas Pension Scheme (QROPS) is an overseas pension scheme that meets specific HMRC requirements, enabling UK pension savers to transfer their UK pension benefits abroad without incurring an immediate UK tax charge (the Overseas Transfer Charge, introduced in 2017).

QROPS arrangements were particularly marketed to UK expatriates and people with a genuine expectation of retiring overseas. However, many schemes were marketed aggressively to individuals with little or no genuine overseas connection — in some cases for the primary purpose of generating commission for the adviser and providing access to high-risk, unregulated investments.

How Were QROPS Mis-sold?

Common patterns of QROPS mis-selling include:

• UK residents with no genuine intention to retire abroad were advised to use a QROPS for tax planning purposes — often resulting in unexpected UK tax charges when they remained in the UK
• Excessive and opaque charging structures — including adviser charges, scheme administration fees, and surrender penalties — that dramatically eroded pension values
• Transfers into QROPS based in jurisdictions with less robust regulatory oversight, leading to reduced consumer protection
• Investment of QROPS funds in high-risk, illiquid, or unregulated assets such as overseas property, hotel investments, or speculative funds
• Failure to adequately explain the loss of UK protections — including PPF protection for defined benefit transfers — and FSCS coverage

Who Is Liable for QROPS Mis-selling?

Liability may arise at multiple points in the QROPS advice chain:

• The UK-based IFA or financial adviser who recommended the QROPS transfer — for failing to assess suitability, capacity for loss, and appropriateness under COBS 9
• The overseas QROPS provider or trustee — if they accepted investments without adequate due diligence, applying principles analogous to those in the Berkeley Burke and Fletcher cases
• UK-based introducers — particularly where they carried out regulated activities without FCA authorisation, triggering FSMA s.27 arguments

Regulatory and Claims Landscape

QROPS mis-selling cases are complex because they often involve overseas regulatory frameworks, unregulated investment structures, and multi-jurisdictional advice chains. However, where a UK FCA-regulated adviser gave the recommendation, UK regulatory remedies are available:

The FOS has upheld complaints against UK-regulated advisers who recommended QROPS transfers where the advice was unsuitable. The FSCS has paid compensation on claims against failed UK IFAs who provided QROPS transfer advice. Civil litigation in the UK courts is available against solvent UK-regulated parties in the chain.