QROPS interview: Nathan Lihou

Retirement Planner speaks to Fairbairn’s chief operating officer Nathan Lihou about winning the Best QROPS provider category at the Professional Adviser International Fund and Product Awards.

How does it feel to have won the award?

We are absolutely delighted to have won this award for our Overseas Pension QROPS. The Overseas Pension team are thrilled that our commitment to service, security and support was recognised by an independent judging panel.

The award is a great motivator to continue development and innovation in the field of international pensions and ensure we keep ahead of the competition. We believe this award provides further reassurance to the professional adviser community that Fairbairn’s Overseas Pension is the right choice for QROPS.

Tell me about your proposition and how it stands apart from competitors?

Since day one we have been convinced that the combination of institutional pedigree (Fairbairn is part of the Nedbank/ Old Mutual Group), first class in-house administration and excellent technical support was  what the QROPS market needed.

We have been absolutely steadfast never to compromise on service, security and support even if it meant slower growth. This award is gratifying as it proves that we were right and that the market really appreciates quality over quantity and value over cheapness.

Furthermore, although this is an ‘offshore’ pension we have tried to create a product that mirrors the features of an ‘onshore’ pension. We have taken on board the RDR and the FSA’s drive to Treat Customers Fairly (TCF). In our opinion clients should always be treated fairly, regardless of whether they are in an offshore or onshore product.

As a result, our QROPS is highly flexible with low transparent pricing. We feel our commitment to TCF is one of the main reasons that we won this award.

What’s next for your company?

We have made a strategic decision to expand our QROPS offering and this has the full support and backing of our parent company.

We have seen increased interest in QROPS from what we call the ‘second’ movers. The market has been through the ‘gold rush’ which was mainly lead by some of the offshore brokers in various parts of the world.

As the market is maturing we are now seeing more of the quality fee based advisers confidently recommending QROPS to their clients.

We are the only QROPS provider that is ultimately part of a FTSE 100 company, thus when advisers (especially the larger firms) conduct due diligence on QROPS providers we tend to come out on top. We see ourselves as the provider of choice for firms that are concerned about their ‘reputational risk’.

As a result, we are seeing an increase in our business flows and are investing further in our resources to handle the additional demand that we are experiencing.

How do you see the QROPS market developing over the coming years?

Firstly, we believe that QROPS is here to stay long term.

However, we have seen HMRC is taking an increasingly dim view on any abuses, whether at scheme or at jurisdiction level. Guernsey has always had an open relationship with HMRC and has developed a voluntary code of conduct that we have signed up to.

There will always be jurisdictions, advisers and providers that try to push the rules or find a technical loophole. Yes, they may work in the short term but ultimately advisers must remember that if it doesn’t look, smell and feel like a pension, then it probably isn’t!

Over the next few years we believe that there will be some consolidation within the QROPS market as this is a niche market with falling margins.

Some of the providers do not have pensions experience or the systems necessary to run an effective low cost QROPS business. We also think some of the providers may have been a little lax in the quality of their business book without understanding the risks involved.

We feel there could be a ‘scandal’ of some kind which will frighten the industry and encourage some of the periphery providers to question their QROPS involvement.

We expect a ‘flight to quality’ as advisers and clients take a lower risk approach; ultimately we believe we will be a beneficiary of that move.

The QROPS market is growing year-by-year and studies by the Institute for Public Policy Research indicate that at least 5.5 million British-born people live abroad with over 400,000 people leaving the UK every year.

As the austerity measures bite in the UK, we are seeing more people wanting to emigrate. We therefore see the QROPS market expanding in the coming years and already have plans in place to accommodate this.

Nathan Lihou is chief operating officer at Fairbairn Trust Company.