Friends Provident backtracks on notorious expat aimed insurance linked fixed term investments

Published:  6 Jul at 6 PM
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Tagged: Canada, UAE, Euro
After decades of pushing expensive, poorly performing insurance-linked fixed term investment plans to expats working in the UAE and elsewhere in the world, offshore insurance giant Friends Provident finally admits their product is failing their customers.

According to the media, FPI is planning to overhaul its products in order to avoid falling foul of new regulations aimed at protecting expat investors from poorly performing, expensive investment plans. The insurer has admitted its fixed-term plans are ‘not good enough’, in a reaction to the high number of complaints received from expats in the UAE. The life industry, according to a spokesperson, ‘could do better’.

As has happened in expat destinations in Asia and continental Europe, the rise of complaints made by investors to the UAE Insurance Authority included the IFAs selling the products as well as the products themselves. Poor performance and staggeringly high costs as well as harsh penalties with early withdrawal were all slated by frustrated clients. FPI’s chief marketing officer Philip Cernic told local media ‘one size fits all’ investment products are no longer acceptable to expat clients, adding that alternatives for those wishing to save for periods as short as five years are few at present.

The plans, often marketed by unqualified or even illegally working IFAs, were a gold mine for advisors for their up-front commissions, whilst charges were high and attempts to get out of long-term plans before maturity could wipe out capital as well as any returns already made. UAE financial authorities announced tough new consumer protection measures two months ago, with the intention of giving protection to consumers via changes in the way such products are sold in the UAE.

Proposals include maximum limits on upfront commissions and straightforward illustrations of charges and fees due from investors. According to Cernic, FPI is also working to improve the standards of UAE IFAs, and has launched an Advisor Academy aimed at realigning the perception of IFAs amongst expat investors. However, CEO of fee-based FA company Sam Instone believes FPI’s efforts as ‘too little too late’, claiming the system is broken and reinventing it is impossible. The many expat investors in many world countries who’ve lost out to FPI might well agree with him.

Source: The National
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