Regulations currently under consultation in the United Arab Emirates (UAE) may pose a threat to the legitimacy of QROPS being used by expats in the region, an expert has warned.
The Emirates Security and Commodities Authority is currently drafting new rules with proposals restricting the promotion of funds in the jurisdiction without UAE central bank approval.
Paul Evans, managing director of SIPP administrator Brooklands Pensions, said providers are currently skirting this restriction using QROPS which may lead to a backlash.
Evans said by restricting the fund choices within some QROPS to a few select products, providers are actually promoting those investments without central bank approval.
"If regulators realise that QROPS are being used in this way to mainly promote funds by the back door, regulators will take a dim view," Evans said.
He added these restricted QROPS are already being promoted in Singapore and Hong Kong as a way around strong regulation controlling investment promotion.
Evans warned the method of circumventing promotion restrictions is not a priority of regulators yet but added the issue is "just under the radar".
The new regulations are expected to be finalised and agreed within the next few months.
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