Survey reveals most investors have problems with financial jargon

Published:  19 Sep at 6 PM
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According to the UK government’s Money Advice Service, most investors and pension savers have difficulties understanding financial jargon.

Almost 90 per cent of those surveyed admitted they didn’t read the small print before signing up to investments or funds. Worse still, the majority had no understanding of the acronyms used by financial advisors when selling an investment.

Over the years, failure to grasp the real meaning of simple financial terminology has had devastating effects on many investors’ life savings, with expats more at risk than most of becoming the victims of mis-selling or outright fraud. Recently, the UK Companies House registry issued a warning that pension scammers are setting up and registering limited UK companies using false names in order to avoid HMRC’s new ‘fit and proper person’ rules.

According to the registry, pension liberation scams are increasing, and the fake companies often use cloned names resembling trusted financial firms to trick savers out of their pension pots. Many such fake companies only operate from an online base, and all offer free pension reviews to unsuspecting clients.

The new HMRC rules are now in force, and forbid the administration of pension schemes by disqualified company directors and those touting pension liberation schemes or tax avoidance schemes. Cold-calling, phishing emails and bogus emails or phone calls purporting to be from Companies House are also all expected to increase due to the change in pension rules.

Expats looking to activate pension transfers or take advantage of the new pension freedom rules due to come into force in April 2015 should carefully investigate the credentials and qualifications of local advisors before signing anything. Checking that your advisor is legally registered with your host country’s financial authority is essential as, for UK citizens, the FCA will not assist in obtaining compensation for malpractice if it takes place outside the UK’s borders.
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