The Corporate Regulator in Australia announced, in a judgement on 6th Feb 2024, that Brite Advisors Pty Ltd was to be put into liquidation.
(More to follow when we have more information)
We published an article about US residents holding QROPS back in 2013 and 2015, and we have been contacted by investors that have pensions and investments on the Brite Platform. It is a worrying time for them as the Australian Securities & Investment Commission’s (ASIC) appointing corporate receivers and suspending all transfers in or out of the platform (other than some regular payments such as pension income).
The receivers are now looking to confirm the asset values on the platform that, initially, seem $69 million dollars short of what should be there. More information about this can be found here on the ASIC website.
SEC – USA
Further, the Securities and Exchange Commission has also filed charges against Brite Advisers USA for failing to comply with the Commission’s requirements for safekeeping of client assets and failing to disclose conflicts of interest associated with Brite’s USA’s recommendations to clients to use a related firm in Australia as a custodian. It appears many US resident clients had no idea about this. More information here.
Brite Advisors – What are the options for investors
Until the official receivers have completed their work and identified all the assets and established how much has been ‘lost’, it is likely that transfers away from the platform will continue to be suspended. That does not stop investors from looking for other suitable advisers to assist when the funds are no longer suspended, and values confirmed to individual investors. We have concerns that some unsuitable advisers will look to take advantage of those investors, who are no doubt keen to move from the platform, and we would advise caution when engaging a new adviser.
Brite Advisors QROPS – USA residents
As we have repeatedly stated over the years, transfers of a UK registered pensions to a QROPS (in jurisdictions like Malta) while resident in the USA, are likely to be chargeable to tax as the IRS does not treat such transfers with ‘rollover’ relief. Many transfers may not have been declared/noticed by the IRS and some may feel it is a good idea to transfer back to a UK pension. However, initial tax advice we have seen suggests that a transfer away may be seen as avoidance by the IRS and make a bad situation worse.
Therefore, when looking for another adviser, make sure local tax advice is taken before moving anything after the suspension is lifted. Further, the IRS is looking at other tax avoidance schemes in Malta and anyone who transferred to a QROPS, while US resident, should get local tax adviser sooner rather than later.
SIPPs – USA residents
The IRS confirmed that a UK to UK pension transfer, while UK resident, is not likely to be chargeable. Those with SIPPs, after the suspension is lifted, may well be in better position than those with QROPS. Again, selecting a suitable, qualified and regulated adviser is essential.
SIPPs or Defined Benefit Transfers – USA residents and UK residents
At the moment of writing this article there is no information linking the UK operations of Brite to these other firms. However, the Australian authorities have already publicly stated that defined benefit transfers were the responsibility of the FCA (Financial Conduct Authority) in the UK who should have been the gatekeeper.
As further information becomes available then we will update our information.
General Investment Account (GIA)
If anyone just has funds invested outside of a pension, then they may want to consider moving to another platform. Be aware, that cashing in a GIA may result in capital gains that could be taxable.
Brite Advisors – investors all over the globe
This suspension has affected investors all over the globe including South Africa, Europe and Australia. Also, as it appears that many investors transferred from a product that had surrender fees which were covered by Brite Advisors on transfer (though this appears to have been funded by borrowings against client assets, unbeknown to investors). This then locked the investors into a new 10 charging structure. So it will be important to see how the receivers deal with this. Again, look before you leap!