British expats warned again over dodgy IFAs

Over the past several years, the UK financial regulator has cracked down on IFAs offering investments which benefit them rather than their clients, causing many to move offshore and plague expat destinations.

Fortunately for British investors and pension savers, most of the easily accessible financial advice firms are now regulated, meaning far fewer risks to inexperienced investors. Unfortunately for expats and those now planning new lives overseas, getting truly independent, non-biased advice is still a lottery, as those unwilling to comply with the new UK regulations have now set up shop in favourite expat locations.

UK advisory firms must now agree exact fees for their services with their clients, a transparency which mostly eliminates the pushing of the high upfront commission and high fee loaded products available from insurance companies. Transparency backed by qualifications is now the name of the game in the UK, and not every IFA has been either willing or able to play it straight.

Industry experts believe a significant number of those unwilling to give up their up-front commissions and work according to the new laws simply upped sticks and moved overseas to countries where regulations were either non-existent or ignored. Sad tales by victims of their operations abound from locations in Europe and Asia, confirming that systematic, damaging mis-selling is the norm in expat hubs across the world. Spain, the Gulf States, Thailand and Hong Kong top the list of places dangerous to expats’ financial health.

Pension transfers to products such as QROPs as well as long-term savings products earn massive amounts for illegally-working IFAs and give limited if any benefits to inexperienced investors who sign up after being taken in by assurances of security and wealth. The worst scenario is that the investments are either illiquid structured products or highly speculative alternative funds such as fine wines and land banks.

Many are prone to fail or are de-listed, meaning investors can’t access their cash, with others charging huge fees on early withdrawal leaving investors with far less than they’ve paid in. Dodgy IFAs, of course, are generously rewarded for sucking in yet another victim.