Lawsuit against FPI IOM and Quilter set to expose illegal IFA techniques

Published:  11 Jun at 6 PM
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The multi-million pound lawsuit against Isle of Man insurers Friends Provident and Quilter International may open up a huge can of worms involving illegally working, unqualified IFAs across most major world expat destinations.

The scam which is now unravelling in the world’s financial media is linked to the crash of Australian property investment LMIM and its spectacular failure during which thousands of expats lost their entire life savings. For some time before the crash, online financial experts in Asia were warning the so-called investment was a house of cards on its way to collapse, but greedy IFAs hoovering up the generous commissions continued pushing it until it finally failed, leaving expat professionals and retirees bereft of a total of 100 million sterling.

The bonds involved were presented in life insurance wrappers, thus hiding the fact that the high-risk, unregulated, unit-linked financial instruments were intended only for sophisticated professional investors, with the use of offshore insurance ‘names’ intended to give the products an appearance of respectability. Many elderly expat investors were fooled as a result, having trusted their so-called IFAs to do their best for them. The rogue advisors’ modus operandum was to wriggle into trusted positions such as chairmen of local expats clubs in order to make their scams easier to perpetrate, and a good number repatriated in a mad rush once LMIM failed, taking with them their massive commissions.

Both Hong Kong and Thailand provided easy pickings for the IFAs, in spite of online warnings from online, experienced, professional investors and financial advisors who were well aware of the likely, longer term end to the story. The upcoming lawsuit seeks compensation for investor losses, accusing the two Isle of Man insurers of failure to conduct due diligence as well as misrepresentation. Some expats who eventually realised they’d been duped had formerly been in contact with the IOM insurers and were disturbed by the seemingly over-friendly relationships between their IFAs and the insurers’ staff.

Claimants in the lawsuit are stating the funds themselves were chosen by the IFAs involved, with a view to the size of their commissions. The cash was invested with the two IOM companies, both of which processed payments, generated annual statements using their logos and deducted high fees for simply doing nothing. The methods used sidestepped UK regulations, although both companies were registered with the British financial authority. It’s possible that a few inexperienced IFAs weren’t aware of the true levels of risk embedded in the so-called investments, but the majority who were happily lining their own pockets with commissions had backgrounds in the sector.
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