In a statement today (20 January) Broadstone said it is supportive of the Government’s objective to ensure that pensions are used for the primary purpose of providing an income for the member. While individuals may have other assets to use in their retirement or later life, it does not believe that pensions should be used as a vehicle for wealth transfer.

However, Broadstone holds concerns around the treatment of taxation around the value and control of lump sums both from Defined Benefit (DB) schemes and from death in service policies.

The changes made in 2015 which allowed for significant tax advantages on death benefits where the member is younger than 75 on death have always appeared unduly generous.

Many DB schemes pay out lump sums on death but these are often by scheme design and not any form of wealth transfer- they are purely functions of the scheme’s rules and we believe these lump sums should continue to be exempt from Inheritance Tax.

Death in service lump sums are often paid in respect of younger people experiencing a shock of early death. Thankfully, these are rare, but they are there to help next of kin at the worst possible time with the benefit put in place to help the family deal with the tragic loss of a loved one rather than for wealth management purposes. So again, Broadstone does not believe it should be in the scope of the policy to apply Inheritance Tax.

Both of these lump sums, if paid within 2 years of death, would be assessed against the Lump Sum and Death Benefit Allowance, and are subject to income tax or a standalone special tax charge if paid later. This seems sufficient should government policy wish to limit the size of these benefits.

David Brooks, head of policy at Broadstone, said: “It is understandable that the Government is reforming the Inheritance Tax regime to ensure pensions are used for their primary purpose of providing income in retirement rather than enabling wealth transfer.”
“However, we believe there are a few elements of the proposals that could be loosened, particularly where the primary purpose of lump sum payments is not for estate management. Tightening this regulation will create an IHT framework that ensures tax reforms are born by those with the broadest shoulders without unnecessarily penalising pension savers and their families in emotional and stressful circumstances.”

“We are also concerned about the impact on “common law” partners who could also be treated unfairly compared to the current tax situation on death and we would urge the Government to consider updating the IHT tax system for the living circumstances of society.”

In a statement it said the  “comprehensive review, which involved surveys, desk-based analysis, and on-site visits, highlights the critical role whistleblowers play in detecting, escalating, and addressing misconduct”.

It also emphasised the importance of robust whistleblowing policies and procedures in fostering a speak-up culture and promoting ethical behaviour.

The report outlines eight key themes and findings, including whistleblower protection, policies and procedures, governance, and training and awareness.

The DFSA observed that many entities are exceeding regulatory requirements by implementing additional measures to build trust in whistleblowing arrangements, encourage transparency, and embed whistleblowing practices into their corporate culture.

All Regulated Entities are encouraged to consider the findings and incorporate them into their operations.

Future engagements with the DFSA may require entities to demonstrate how they have addressed the review’s key areas.

The SFC said in a statement today (6 January) that Chan was sentenced by the District Court on 2 February 2024 to 20 months’ imprisonment after his convictions for three counts of fraud and one count of attempted fraud.

The Court found that Chan was assigned to a branch of SCB in Wan Chai at the material time, and his job duties included the promotion of insurance products issued by external insurers to the bank’s clients.

Between January and March 2019, Chan assisted two clients in taking out insurance policies with an external insurer. Between August and September 2019, Chan induced one of them to transfer US$52,300 to a bank account connected to him. He also induced the other client to transfer over HK$420,000 to the same bank account during the same period.

Chan did so on the pretence that the transfers would be used to settle premium payments with their insurer. He subsequently attempted to cancel the clients’ insurance policies by falsely representing to the insurer that they wished to do so.

The SFC considers that Chan is not fit and proper to be a regulated person due to his criminal convictions.

Chan was a relevant individual engaged by SCB to carry on Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities under the Securities and Futures Ordinance between 1 September 2018 and 16 October 2019.

Chan is currently not registered with the Hong Kong Monetary Authority or licensed by the SFC.

The website in question, ipswltd.com, had the company name of Island Private Swift Ltd and an email address of info@ipswltd.com.

The island regulator said the website claimed “to represent the company and states that it has an Isle of Man address, namely IPS House, 49C-B Circular Road, Douglas, Isle of Man IM1 1AZ. As far as we can ascertain there is no such legitimate address in the Isle of Man”.

The website also purported to offer a wide range of financial products including but not limited to money transfer and foreign exchange services.

The regulator further said it had seen emails from the potentially bogus company signed off by a Dr. Abdul Wahab as Director, Foreign Currency Operations within the organisation.

It had failed to establish any association between the website and any genuine Isle of Man companies or businesses, and further pointed out that to offer the financial services and products mentioned within the website in or from the Isle of Man, would require them to be licensed or registered by the Authority.

“The company is not licensed or registered with the Authority. A list of all entities licensed or registered by the Authority can be found at:https://www.iomfsa.im/register-search/

“Under the circumstances, the Authority is concerned that any person who has accessed the website may potentially become the victim of fraud, or it may be an attempt at gaining personal data from the browser in order to steal their identity.”

In a statement, the SFC said Tse, the principal of the law firm, O Tse & Co., pleaded guilty to one count of contravention of the secrecy provision and was fined $25,000. He was also ordered to pay the SFC’s investigation costs.

The court heard that Tse, acting as the legal representative of an individual, received confidential information regarding a restriction notice that the SFC had disclosed to that individual. The confidential information was subject to the secrecy provision under the SFO. After receiving the confidential information, Tse disclosed the information to two other individuals on 9 February 2021.

This marks the first occasion in which a Hong Kong practicing solicitor has been convicted of an offence for contravening the secrecy provision under the SFO. The investigation into this breach originated from the SFC’s investigations of suspected ramp-and-dump cases concerning a sophisticated syndicate.

SFC executive director of enforcement, Christopher Wilson, said: “Legal professionals should maintain the highest standard of professional conduct as any wrongdoing while acting on behalf of their clients may jeopardise the integrity of our investigation.”

The individual is a subject of SFC’s investigations of suspected ramp-and-dump cases. The restriction notice prohibits the relevant brokerage firm from dealing with or processing certain assets held in the trading account of that individual.

The disclosure by Tse was in violation of sections 378(7) and 378(11) of the SFO. A person who breaches the secrecy obligation is liable to prosecution and upon conviction on indictment to a maximum fine of $1m and imprisonment for up to two years or upon summary conviction, to a maximum fine of $100,000 and imprisonment for up to six months. A regulated person may, in addition, be disciplined.

A social media ramp-and-dump scam is a form of stock market manipulation where fraudsters use different means to “ramp” up the share price of a listed company and then induce investors via social media platforms to purchase the shares they “dump” at an artificially high price.