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Expats warned over unregistered FAs and unregulated investments
| Published: | 5 Apr at 6 PM |
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Despite, or perhaps because of the many financial misselling scandals over the last few years, it’s still possible to recover lost funds in the UK via due legal process but, if you’re an expat living overseas, your chances are slim to none.
Legislation in the UK as regards the giving of financial advice has tightened considerably during the last several years, and the UK’s Financial Conduct Agency’s regular warnings have alerted many inexperienced investors to the risks of misselling and fraud by commission-hungry FAs. However, expats living overseas need to realise their protection against financial scammers may well be non-existent
The best way to protect your savings is to know and recognise any danger signs in the advice you’re being given. If you’ve been approached by an advisor who says he’s regulated, check the regulator, the type of financial advice allowed and the degree of investment protection if any. Also, you’ll need to verify the advisor’s own qualifications and those of the official body which granted them, as well as asking whether he has professional indemnity insurance covering the advice given and whether he is paid commission – if so, how much.
If your queries check out, then it’s probably safe to proceed, but you should also be aware that certain types of investment, whoever recommends them, carry a high level of risk and are unsuitable for anyone but professional investors. Many such investments are marketed by unscrupulous advisors as niche products promising unusually high returns. Invariably, these ‘opportunities’ pay extremely high commissions to the FAs who sell them, and many such schemes result in financial disaster for expat clients, especially if their retirement nest-egg was invested in its entirety.
Recent examples of high risk investments turned sour include the infamous LMIM Ponzi scheme, touted across Asia by unregulated, illegally-working financial advisors in various countries until a few weeks before it folded. High risk investments, even if they are not simply Ponzi schemes, have a high probability of underperforming, a fact rarely mentioned by unscrupulous IFAs in expat locations.
Other investments to avoid include unregulated collective investment schemes (UCIS), the sale of which to ordinary investors was banned by the UK’s FCA in January 2014. Considered totally unsuitable due to their disproportionate risk to return structure, they are increasingly being pushed to expatriates all over the world by unscrupulous advisers. The motto for expats nowadays is simple – if you don’t know, don’t invest.
Legislation in the UK as regards the giving of financial advice has tightened considerably during the last several years, and the UK’s Financial Conduct Agency’s regular warnings have alerted many inexperienced investors to the risks of misselling and fraud by commission-hungry FAs. However, expats living overseas need to realise their protection against financial scammers may well be non-existent
The best way to protect your savings is to know and recognise any danger signs in the advice you’re being given. If you’ve been approached by an advisor who says he’s regulated, check the regulator, the type of financial advice allowed and the degree of investment protection if any. Also, you’ll need to verify the advisor’s own qualifications and those of the official body which granted them, as well as asking whether he has professional indemnity insurance covering the advice given and whether he is paid commission – if so, how much.
If your queries check out, then it’s probably safe to proceed, but you should also be aware that certain types of investment, whoever recommends them, carry a high level of risk and are unsuitable for anyone but professional investors. Many such investments are marketed by unscrupulous advisors as niche products promising unusually high returns. Invariably, these ‘opportunities’ pay extremely high commissions to the FAs who sell them, and many such schemes result in financial disaster for expat clients, especially if their retirement nest-egg was invested in its entirety.
Recent examples of high risk investments turned sour include the infamous LMIM Ponzi scheme, touted across Asia by unregulated, illegally-working financial advisors in various countries until a few weeks before it folded. High risk investments, even if they are not simply Ponzi schemes, have a high probability of underperforming, a fact rarely mentioned by unscrupulous IFAs in expat locations.
Other investments to avoid include unregulated collective investment schemes (UCIS), the sale of which to ordinary investors was banned by the UK’s FCA in January 2014. Considered totally unsuitable due to their disproportionate risk to return structure, they are increasingly being pushed to expatriates all over the world by unscrupulous advisers. The motto for expats nowadays is simple – if you don’t know, don’t invest.
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