The Expat Pensions That Vanished

Written by Ali Hussein and Published by the Sunday Times on July 17th 2022.

Rogue salesmen snared hundreds in a mis-selling scandal.

Now big firms and regulators are under scrutiny

Manita Khuller had only just moved to Thailand when a friend invited her to a party for expats organised by the British Chambers of Commerce. It was an event that would turn her life upside down.

The victims: Manita Khuller and Andrew Drummond lost thousands of pounds from their pension funds and leave her fighting for her life savings for the next decade.

Khuller, 51 at the time, was only recently divorced and had moved to Bangkok from London with her 11-year-old son to work as a management consultant.

She had travelled a lot in her career but this was the first time she had moved abroad. She was staying in a flat in downtown Bangkok, paid for by her employer, Ogilvy & Mather, a subsidiary of the global advertising company WPP.

It was a humid November day for the garden party, held at a local park. About 100 British expats mingled, enjoying free drinks and canapés. Khuller got chatting to Gary Bradford, a smartly dressed, softly spoken, middle-aged financial adviser, who was also from the UK. After a while the discussion turned to Khuller’s pensions.

“As a financial adviser it seemed like a natural thing for him to ask me about,” Khuller said. “I had little idea about pensions and tax, now that I was living as an expat for the first time.” Bradford said he could simplify her affairs, save tax and allow her to pass on more money to her son. Planning for retirement had been on her mind, so she agreed to meet Bradford, who worked for Professional Portfolio International (PPI). Its website says it offers “the highest level of financial planning and wealth management related services to clients throughout Southeast Asia and beyond”.

Over coffee at the luxury Emporium Suites Hotel in central Bangkok, Khuller told Bradford that she did not want to take too many risks as she was nearing retirement. She had about £320,000 in final salary pensions built up over decades working for Unilever and Procter & Gamble. He suggested she do what thousands of other expats were doing at the time, and move her money into a Qualifying Recognised Overseas Pension Scheme (Qrops). These pensions were developed by the Treasury in 2006 and recognised by HM Revenue & Customs. They were designed to help British workers to head overseas for jobs and still keep saving for retirement in a tax-efficient way.

Khuller agreed to move her money to a Qrops offered by the finance firm Skandia, which was later known as Quilter International and is now Utmost International. Within three years one of her investments would fail and another would be frozen, cutting her retirement fund by about half. She would later discover that her investments and adviser were unregulated, leaving her no route to gain compensation. Bradford would become impossible to contact.

Khuller, now 61, has spent the past decade tied up in legal battles trying to get the pension that was scattered around the world, without incurring thousands of pounds in charges.

She is one of hundreds of British expats who are starting to realise that their retirement plans have been shattered after they were persuaded by financial advisers to put their money into Qrops, which they believed were approved by the UK government.

Many find that the British advisers working overseas who convinced them to make their investments have now disappeared, and there is little help they can get from regulators.

Utmost International and RL360, two firms that offer investment products to expats, face a class action worth up to £200 million over allegations of widespread mis-selling by subsidiaries they now own, via financial advisers.

These subsidiaries, Royal Skandia Life Assurance and Friends Provident International, are also accused by lawyers of creating products that do not conform to regulatory standards in various jurisdictions around the world and of failing to spot wrongdoing.

Mis-selling on an industrial scale

Qrops allowed you to move your savings abroad while preserving tax advantages. At the time they were introduced life was getting tougher for financial advisers in the UK. Their profitability had been hit by a crackdown on commission and new rules to protect savers. Many investors were going it alone.

Moving overseas offered a new chance to make money for advisers, particularly in countries with far looser or non-existent regulations, and British expats were key customers.

The advisers: Neil Robbirt and Gary Bradford

Initially it looked as though the new-style pensions had been a success. Within ten years 101,700 pensions worth £9.7 billion had been transferred to Qrops, according to HMRC. But slowly the complaints started to come in from savers who were querying exactly where their money had been invested. Qrops, it would emerge, were used to mis-sell pensions on an industrial scale, and in some cases to facilitate scams, according to a House of Commons work and pensions committee report last year. An investigation by The Sunday Times has found cases of alleged mis-selling involving expats in Spain, France, Greece, Switzerland, South Africa, the United Arab Emirates, Thailand and Australia.

No such thing as a licence

As the number of complaints grew, some authorities, such as in Thailand, tried to clamp down on rogue advisers. The adviser Neil Robbirt, 60, of the now defunct Bangkok-based firm Global Consultants, has faced extradition to Thailand over allegations that he ran an unregulated advice business. He returned to the UK in 2016 and now lives in Kent. In December a judge at Westminster magistrates’ court denied the extradition order on the grounds that it would breach Robbirt’s human rights because of Thailand’s poor prison standards.

Robbirt’s company was among 11 allegedly unlicensed advisory businesses that targeted expats, according to court reports. One of Robbirt’s clients was Andrew Drummond, 70, a freelance journalist who now lives in Royal Wootton Bassett, Wiltshire.

Drummond met Robbirt while working in Thailand and they became close. He was persuaded to invest in a Qrops and ended up losing tens of thousands of pounds, he claims. His account, now held with RL360, is still incurring charges. Drummond said: “When the fund went belly up, I did not hear about it from Robbirt but from other victims. When I spoke to him about it and told him I had asked to put my funds in low-risk investments he said, 'Nowadays there is no such thing as low risk.’

Robbirt denies this and says he tried to help to recover money from the failed investments that he recommended. He said his firm operated in Thailand for 23 years and claims the country has no licence available for advisers.

Class action over losses

The focus is starting to turn to the investment companies that created products made available through Qrops, many of which have subsidiaries in the UK.

A class action has been launched against Royal Skandia Life Assurance Ltd, now part of Utmost International, and Friends Provident International Limited, now part of RL360, by the London law firm Signature Litigation and Callin Wild, based on the Isle of Man.

The claim is being made on behalf of about 800 British expats who lost between £145 million and £200 million according to written submissions to the Treasury committee. The submissions were made by Niall Coburn from the Australian firm Coburn Corporate Intelligence, on the invitation of the work and pensions select committee as part of its investigation into pension scams in 2020.

The litigation, submitted to the High Court on the Isle of Man in 2020, will have its next hearing tomorrow.

Coburn says in the overview of his written evidence to the committee that the UK’s Financial Conduct Authority (FCA), the regulator, failed in its duty to stop investment companies selling high-risk investments to savers.

RL360 and PPI were approached for comment. Utmost declined to comment.

What now

The FCA said: “We have a huge amount of sympathy for those who have lost money in these failed investments. These offshore investment bonds were offered by life insurance companies regulated by the Isle of Man Financial Services Authority, and were sold to customers in overseas jurisdictions (via overseas advisers). If we uncover evidence of serious poor behaviour by firms we regulated for activities in the UK, we will consider the full range of our powers.”

Drummond’s pension is now £10,000 in the red. RL360 offered to waive the negative balance if he agreed not to pursue any future legal claim. Drummond has refused to do this.

Meanwhile, Manita Khuller, who now lives in Chiswick, west London, has been on a crusade to find her money and bring her rogue salesman to justice. We tried to contact him through PPI, but had no response.

Bradford’s firm made about £22,400 for securing the transfer of her pension to a Qrops, plus annual commission — a total of £35,000. Khuller says none of this was disclosed to her at the time. She later found out that her pension was held in Guernsey by trustees called FNB International, while her money was invested in Australia and other countries.

After a court case, which Khuller won on appeal, FNB returned the original amount she invested. She is the first person to get back some of their money that was stuck in a Qrops pension.