New FCA alert focuses on domestic and international investment irregularities

Published:  6 Feb at 6 PM
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The British Financial Conduct Authority is planning to crack down on both domestic and international investments and pension transfers, in a move which may benefit expats in the UAE as well as in the rest of the world.

Information on the long overdue move by the FCA comes in the form of an alert based on the growing number of expat investors being persuaded into unsuitable products or downright scams. Over the last decade, the worldwide Brit expat community, many of whom are retirees unused to investing, has been at risk from commission-hungry, often illegally-working IFAs lurking within local expat groups.

The UK financial watchdog is planning to crack down on international as well as domestic pension transfers, noting that these are often completed without taking into account the suitability of the assets compared to the client’s best interests. The move is part of a global regulatory attack against international financial advisors using ‘questionable sales practices’ aimed at expats working and living overseas.

A favourite for some years has been the mis-selling of expensive long-term savings plans impossible to cancel without huge losses should the expat buyer’s circumstances change. The FCA’s alert comes after an ‘alarming amount of complaints’ spurred similar moves by the UAE’s Insurance Authority aimed at changing how investment, life insurance and savings products are sold. However, the UAE's rules will not come into force for another two years.

Expats should be note the FCA has no power over UK-based financial advice firms who are not registered with the authority, nor can they act against financial firms based outside the UK. FCA-regulated IFAs based in the UK and guilty of mis-selling can be referred to the Financial Ombudsman Service, and can be penalised and forced to refund those who’ve lost out due to a savings plan or pension transfer. The upper limit is set at £150,000.

Efforts to prevent financial misconduct are also ongoing in Singapore, South Africa, India, Poland, Qatar and Hong Kong. Regulators in offshore locations including the Isle of Man, Guernsey and Jersey are stepping up warnings to potential overseas investors following an alarming increase in the number of reported scams.

Expats looking to invest or start a savings plan are urged to check that individual IFAs as well as their advisory firms are registered with the FCA in the UK, and that their registration allows them to provide the services they’re offering.

Source: The National
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