According to the ruling, expat Mr L returned to Australia from the UK.
On 22 March 2017, Mr L approached Hargreaves Lansdown to transfer his self-invested personal pension (Sipp) to a qualifying recognised overseas pension scheme (Qrops).
25% Qrops charge
However, the platform provider advised the client it has put all Qrops transfers on hold after the UK government announced earlier that month in the Spring Budget that it would introduce a 25% tax charge on some Qrops transfers requested on or after 9 March.
These included all overseas pension transfers outside of the European Economic Area (EEA) unless the pension pot was being transferred to the country in which the person would reside – an exemption which would have applied to Mr L in this case.
Rops list suspension
Mr L, who was looking to transfer his Sipp into an occupational pension scheme in Australia run by LGIAsuper, said he had until 13 April 2017 to make the transfer, as after that date the scheme operator was considering ceasing Qrops business.
This is because in the Spring Budget, HMRC also informed pension scheme providers that they had until 13 April to inform the UK taxman that their products mets the new criteria for inclusion, which involved taking on the tax liability imposed by the transfer.
Mr L complained to FOS that his Qrops transfer should have been pushed through urgently, otherwise he may never be able to transfer.
No delay
However, the Ombudsman rejected his complaint on the grounds that, at the time of the watchdog’s investigation, LGIAsuper said that, because of the budget changes, it is not currently accepting new Qrops business as it decided whether to pull out of the market altogether.
Therefore, as the client did not request a transfer before 9 March 2017, the Ombudsman said “it was not the case that Mr L had to transfer quickly”.
“At the time of writing this decision LGIAsuper has not yet decided whether it wishes to provide the undertaking to the UK tax authorities that is now required to maintain the Qrops registration after 13 April 2017.
“LGIAsuper is simply not accepting transfers now and might never do so again. Hargreaves Lanasdown cannot make the transfer to LGIAsuper now because LGIAsuper will not accept it now,” said ombudsman Adrian Hudson.
He added that Mr L would need to wait as Hargreaves Lansdown cannot transfer the funds to the LGIAsuper Qrops until the provider had decided whether it wants to comply with the new HMRC requirement.
LGIAsuper was subsequently dropped from the Rops list of compliant schemes when it was re-established on 18 April, with the firm announcing that the HMRC requirement would clash with Australian pension tax rules.
Mr L response
Mr L denied FOS findings that LGIA had stopped doing Qrops business, accusing the watchdog of proving no evidence of the claims.
“Your comments about LGIA are just plain wrong. I am in constant contact with the Qrops expert there at LGIA.
