Expat and UK resident investors slate life companies over LMIM losses

Published:  5 Sep at 6 PM
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As lawyers in the UK and Australia prepare court cases on behalf of victims of the largest financial scandal to hit Australia in decades, many are accusing life companies of a lack of due diligence.

The failure of LMIM and its Managed Performance Fund (MPF) has devastated savers and investors in expat locations such as Hong Kong, the UAE, Thailand and the rest of Southeast Asia as well as many in the UK, Europe and Australia. Total losses are running at around AU$369 million, and investors have been warned to expect no more than five per cent of their investments in returns.

According to the Australia Securities and Investments Commission (ASIC), MPF was a wholesale, unregistered scheme unsuitable for retail investors. However, it was offered in offshore locations as part of the life company bonds being sold by unethical FAs as well as being pushed as part of QROPS pension transfers.

One investor, whose losses are around £350,000, claims that the product provider was fully aware that the fund he was sold was intended for experienced investors only. He considers that the high management charges he is still forced to pay to the insurer should have ensured due diligence on the content of the fund and its risks.

The Advisors’ Committee for Investors (ACI), a 30-strong group of international FAs whose mostly expat clients are trapped in LMIM, are campaigning on victims’ behalf and have expressed concern over the failure of the Australian regulator to act before the collapse. The group believes the regulator should have spotted the obvious red flags and employed means to curb life companies selling the fund as part of their products.

According to another victim, life company products are mostly sold by unqualified, unregulated offshore FAs touting the products which give them the largest commissions. A recent list of disasters includes EEA, Harlequin, Axiom litigation funds, Brandeaux and Forestry for Life, all alternative investments distributed by rogue advisors.
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