Britain’s Daily Telegraph today reports on the scandal of foreign based independent financial advisors selling duff products and also dodgy funds recommended by major financial institutions.
Financial writer Katie Morley highlights the smarmy IFA’s and also the offshore arms of major British financial institutions, which also reap major benefits from the percentage scams.
Thailand, Dubai and Spain feature highly – and writes Morley:
“Foreign financial advisers often sell investments within “insurance bonds”, which act as investment containers or “wrappers”. Technically, they are classed as insurance policies, which in some countries means that the salesmen require fewer qualifications.
Insurers that have provided the bonds in recent years include some major, reputable firms, such as Skandia and Royal London.
These insurers pay the financial advisers via commissions. The commissions come straight out of clients’ money. This echoes the once-widespread system of remunerating investment salesmen in Britain, now largely outlawed.”
Skandia, Royal London feature heavily on this site, as of course does de Vere – and I am surprised the Daily Telegraph is even treated by the newspaper as a credible company.
But you need to go here to read the full story. Some 99 per cent of these IFA’s are running unregulated in Thailand.
Few of these IFA’s are registered with the Thai SEC. And of those few the companies tend to submit one nominal person in their company.
Not that registering with the Thai SEC will make any difference though. It merely goes through motions with its ‘Investor Alert’ list. I have yet to hear of successful prosecutions. But if anyone has please let me know.
A lot of these guys are registered with Chambers of Commerce in Thailand, Rotary Clubs etc – some have even become Presidents!
To test your financial advisor ask him what penalties you incur if you take your money out now.
The interesting part of this story is that the Daily Telegraph is getting close to those insurance companies many of which from their bases in the Isle of Man have been taking the pensions of Brits in Thailand and recommending duff funds to IFAs some of whom do not know any better but most of whom go for as they offer the best comissions.
Is it criminal? Well, there is not much it seems that financial institutions do wrong appears to be found criminal and nobody goes to jail – Its easily rectified with a fine – and they have your cash to pay for that. The fund managers go broke – after whistling the cash up somewhere, where the sun does shine.
Sarah Lord, head of financial planning at Killik & Co, a British FCA-regulated firm, said: “The operation of offshore advisers, in the main, is totally unscrupulous. In many offshore jurisdictions, such as Dubai and the United Arab Emirates, there is very little requirement for disclosure of remuneration, with up to 15pc of assets being advised upon being taken in hidden commissions. The requirement to demonstrate suitability is negligible.”