Misselling of financial products by dodgy IFAs still rampant in the UAE

Published:  31 Jan at 6 PM
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In spite of UAE regulations on compensation for financial irregularities involving investments, expats in the UAE are still at risk from dodgy IFAS.

A recent report in Dubai’s English language media confirms many expats living and working in the Emirates are losing tens of thousands of dirhams to unprincipled independent financial advisors. One British lawyer who’s lived in Dubai for 11years tells it like it was when, around a year after he’d arrived, he was mis-sold a regular savings pension plan by a rogue expat presenting himself as an independent financial advisor.

The product, linked to a life insurance policy, seemed fine on paper, leading him to commit Dh3,500 monthly for a term of 25 years. The IFA demonstrated projected returns, but failed to mention the product’s substantial fees and costs which would all but negate his promised amounts. Of course, the IFA’s commission wasn’t mentioned either.

Ten years down the road, the expat's fund has leaked an amount of Dh420,000, made up of administration fees, yearly transaction fees and fees for investments, totalling five per cent of his annual contributions. Over the last decade, he’s paid in over Dh420,000, but the plan is now only worth Dh415,500. The IFA, of course, will have received an upfront commission payment of around Dh45,000. According to the understandably unhappy investor, as soon as he’d signed up, the man simply disappeared.

Sadly for the expat concerned, it’s now too late to apply to the UAE financial authorities for compensation citing mis-selling of an investment. Both the Insurance Authority and the Securities and Commodities Authority offer a protective port of call for those caught up in mis-selling of financial products, but the complaint needs to be made within six years of signing up.

A UK-based legal firm is presently dealing with several similar cases on behalf of UAE expatriates, telling the media the majority of their UAE clients don’t realised they’ve been taken in until well into the agreed term. Products of this type are still being freely sold to unsuspecting expats all over Asia and Europe, causing huge losses and often financial ruin to investors.
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