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FSA fines N&P £1.4m over Keydata advice

by Iain Martin on Apr 18, 2011 at 11:06

FSA fines N&P £1.4m over Keydata advice

The Financial Services Authority (FSA) has fined Norwich & Peterborough Building Society (N&P) £1.4 million for failing to give customers suitable advice over traded life settlement products from Keydata Investment Services.

N&P failed to properly assess the financial circumstances of many of the 3,200 clients it advised to invest in the products from Keydata, according to the regulator. It said the Norwich-based building society, which has agreed to pay £51 million redress to customers, designated clients as having a higher risk tolerance than was appropriate.

An independent review found that 65% of the N&P’s Keydata products sales from sample were unsuitable, according to the FSA final notice. Over half of the customers were advised by N&P to invest 20% or more of their total funds into Keydata products while over 10% were advised to invest more than 50% in traded life settlement investment plans.

N&P advice failings included:

  • N&P emphasised that the Keydata products were not correlated with equity markets but did not make clear that traded life settlements were at least as risky.
  • N&P gave the Keydata products a risk rating of four on a one-to-10 scale which was upgraded to six after the collapse of Lehman Brothers.
  • N&P recommended Keydata products to customers who sought guaranteed income or capital growth.
  • N&P advised clients to move from cash into Keydata products when they were not prepared to loss all their capital.

The FSA said N&P should have been aware that the 7-8% return offered by the Keydata products would make them particular attractive to certain customers seeking to generate income. The Keydata products were complex and N&P customers, who had an average age of 62, were inexperienced retail investors who would not have easily understood the risk involved, according to the regulator.

It said N&P advisers failed to consider other income generating products, which would have offered interest rates within a couple of interest points of the Keydata plans, with an element of capital protection.

The FSA revealed that N&P carried out a review in June 2007 when it realised that 30% of all investment products sold during the first quarter of 2007 were from Keydata. The N&P compliance team produced a report setting out concerns about the suitability of advice but no effective action was taken, it said.

The FSA has also investigated N&P over the sale of other investment products and has ordered an external review of advised sales. N&P will pay compensation to these clients where appropriate, the regulator said. N&P cooperated with the FSA and agreed to settle the case at an early stage, which entitled it to a 30% discount on its original £2 million fine despite making £2.7 million in commission from the sale of Keydata products.

‘N&P failed in its basic duty to provide suitable advice to its customers, despite an internal compliance report pointing out that there were problems as early as 2007,’ stated Tracey McDermott, FSA acting director for enforcement and financial crime.

‘Firms cannot treat customers fairly unless they pay attention to their financial circumstances and attitude to risk when they make recommendations. This is the only way to prevent widespread mis-selling like this.’

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64 comments so far. Why not have your say?

Jonathan Kirby

Apr 18, 2011 at 11:11

And the winner is?

The FSA who get to keep the money.

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Michael Brown

Apr 18, 2011 at 11:15

Such a shame a good institution was ruined by such greed, but they would not listen to the operators.

The senior managers should hold their heads in shame, resign and let the society be swallowed by another so that it may still survive.

Perhaps they should also look at the old compliance dept personnel to see if there can be some redress on the people that signed this off or ensure they never work in financial services again.

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newgenIFA

Apr 18, 2011 at 11:18

that'll pay for a few more over-inflated salaries..

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Julian Stevens

Apr 18, 2011 at 11:19

A more pressing issue, as far as I'm concerned, is when, if ever, I'm going to get back the special additional levy with which the FSCS hit my firm because it failed to pursue other avenues first. Bastards.

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Duncan Carter

Apr 18, 2011 at 11:28

Wouldn't the FSA fine be of more value if paid into the FSCS fund?

Let's face it, no individual within N&P is going to meet the cost directly unlike small firms that have had to hand over hard cash to meet the additional levy.

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Premier Shareholders Group

Apr 18, 2011 at 11:33

Both “product providers” and “financial advisors” neither know nor care if an investment product is being missold as “high risk” or “low risk”.

And some “advisors” are so stupid they have no understanding of the products that they use as a vehicle to rob people.

No use banning them from working in the financial services industry, because as soon as one disappears another crook springs up to take their place.

Best ban “financial products” then we would not have to suffer “financial advisors”

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Stephen Cooper

Apr 18, 2011 at 11:38

Duncan is spot in with his comments above. It is easy to play fast and loose with client's money seemingly, when there is no real penalty on those responsible? With a small IFA, the FSA would probably come out with a 'not fit and proper' ruling and stop them trading, but all that is happening here is that the investors with the N&P are having to shell out. How about some 'unfit' rulings on the people responsible for this debacle?

Any chance they might be struck off before they reappear somewhere else?

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Charles Rickards

Apr 18, 2011 at 11:38

Shame that Key Data wasn't properly researched by the Regulator before they were authorised to trade. It is so easy to point the finger of blame when it all goes wrong. Bloody shame for N&P and those who did their best to research the panel products. As an ex N&P adviser, I don't recognise the greed factor. Maybe I am naive, but I always felt that they were tryinmg to do a good job for clients and make a profit. There was a provider and product panel, however, this was preferred not mandated. In addition the compliance team were thoruogh in ensuring the sales processes were adhered to.

To my mind the regulator should ensure that provider companies are fit for purpose before they are authorised to sell in the UK. All products should carry a health warning, like cigarettes and claims for bad advice should be dealt with by the courts.

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EX Adviser

Apr 18, 2011 at 11:38

It is a shame for the industry. We have all these Advisers running around getting their exams and still having to make a living and then a Building Society tells their sales force how to sell the Product and they will carry the smell of this around with them for years.

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Julian Stevens

Apr 18, 2011 at 11:42

To Duncan Disorderly ~ Given the colossal sums the FSA has been fining the industry over the past couple of years, it's amazing that we should be required to pay any levies at all. Yet still the Canary Wharf operating budget goes up and up and up. It must have something to do with the £50m earmarked for morphing the FSA into the FCA. Hanged if I can figure how Hector's come up with such an absurdly stupendous figure, but we know he's always got at heart the most efficient and cost-effective deployment of industry funds, so I continue to sleep easy.

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Stephen Cooper

Apr 18, 2011 at 11:42

I can't yet decide whether 'Premier Shareholders Group' above is intended as a joke or not? I'm guessing it is, as surely no one could be so moronic to make such sweeping condemnations of a complete industry.

If meant to be serious, check yourself into rehab - I really think you need therapy!

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Tim Page

Apr 18, 2011 at 11:44

Who was in charge in June 2007, when the management ignored the internal compliance report that first flagged this up?

Why haven't those individuals been named and censured?

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Joke

Apr 18, 2011 at 11:46

What I can't get my head around is, the director of Keydata who started all this is still living the high life spending his millions with not a care in the world about leaving a total carnage behind him. Why nothing is done about this...the route of the problem.

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John Whipple

Apr 18, 2011 at 11:46

Lets take a step back who is going fund this fine?

Why the existing members many of these who were missold to in the first place!

Who is going to walk on home free all assets intact ?

Why the executives, managers and directors who targeted these sales against their own members.

Where is this fine going?

Why not to FSCS ? to help mitigate the huge levy imposed Oh no but to the FSA who have done exactly what? to merit this sum exactly?

Punishment derived from pain but painful it seems to just the ordinary members of the N&P not to anyone else.

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Premier Shareholders Group

Apr 18, 2011 at 11:52

@Julian Stevens

However many fines the FSA imposed over "the past couple of years" they are still not enough because - as is clearly demonstrated - the abuse goes on and on.

The "financial services industry" appears to believe that is exempt from laws governing retail sales and consumer protection.

A rethink is long overdue.

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Bob Donaldson

Apr 18, 2011 at 11:56

@ Premier Group - You are obviously extremely upset at what has happened but I would ask you to question your own positions in this matter. Some of the investors were no doubt greedy, some no doubt stupid and some just taken in by a good sales line from the N & P although none of that makes it right. How lmany investors simply relied upon the advice and did not read the literature given to them.

It just goes to show you that investing upon a building society or banks advice is not always as safe as you would like it to be just as putting you rmoney on deposit with Northern Rock was not so secure until the government bailed them out.

We have seen this mass selling in the past with With Profits Bonds and Distribution Bonds by the building societies and the latest product of course are the structured plans which half the clients who hold them fail to understand.

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Julian Stevens

Apr 18, 2011 at 11:57

To Charles Rickards ~ To be fair to the FSA, researching a provider's product range as a condition of granting it approval to trade isn't part of its remit, even though some would like to see it becoming so. What seems to have been at fault are N&P's research department in sanctioning KeyData's life settlement-backed products for recommendation and then the management promoting them being flogged to all and sundry without due regard for suitability. Our network's research department made very clear that such products were not approved.

Never mind ~ all these sorts of problems will become history once we've all settled down into the new world of the RDR.

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Tim Page

Apr 18, 2011 at 11:59

@ Stephen Cooper:

The Premier Shareholders Group is a group of investors "stuffed" (technical term) by the Premier Investment Group who marketed geared traded endowment plans via the Isle of Man (which is now trying to wash its hands of the situation).

They are very angry and have every right to be.

I agree that this particular post does not to much to advance the debate about what went wrong at N&P.

But then if you'd seen your life savings decimated in one fell swoop, I'm not sure you'd be too interested in the distinct between regulated onshore advice and unregulated offshore advice.

But then neither would many of the N&P customers... (but at least they will eventually be compensated).

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Tim Page

Apr 18, 2011 at 12:13

Back to my earlier comments. Who was in charge at N&P in June 2007? And what are they doing now?

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Julian Stevens

Apr 18, 2011 at 12:13

Premier Shareholders Group? Who are you?

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Tim Page

Apr 18, 2011 at 12:19

@ Premier Shareholders Group:

I think you'll find that mainland UK-based financial advisers about to face just such a rethink (the Retail Distribution Review will be implemented on 1st January 2013).

Of course is does not apply to unregulated offshore advisers...

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Stephen Cooper

Apr 18, 2011 at 12:21

@Tim Paige

Thanks for that Tim, not something I knew and you're right, I would be pretty unhappy if my life savings were lost.

Nevertheless a pretty damning judgement on an industry as a whole and a tad unfair perhaps on the very very many IFAs who do care passionately about their client's assets, accepting that this may not have been the case at the N&P and the Premier Investment Group. PIG by name, pig by action then.

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Phil Castle

Apr 18, 2011 at 12:22

John Whipple has a good point and it is one the FSA have NOT learnt having fined Nationwide for data lost when a laptop was STOLEN from an employees hoem previously. Fining mutuals does NOTHING to the responsible person and no lessons are learnt, but then the number of laptops and mobiles lost by the FSA and MOD in the past is indicative of this rot.

Polluter must pay. Individuals need to be held responsible and sanctioned accordingley, it is pointless fining a mutual when those transgressed AGAINSt are also the same people who end upo being fined!

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Julian Stevens

Apr 18, 2011 at 12:32

There's no such thing as unregulated offshore advisers, at least not operating in the UK.

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Tim Page

Apr 18, 2011 at 12:43

@ Julian: How about Spain - please see below.

@ Premier Shareholders Group:

It would appear (from my limited research) that your compliants are against an Isle of Man fund manager (which is not regulated by the UK FSA) and an unregulated "introducer" in Spain (also not regulated by the UK FSA). The majority of thoose affect by this matter appear to be Spainish residents.

As far as I can see no FSA-regulated advisers are involved.

Therefore can I ask, what benefit you thought your comments would be on this blog (which is aimed at mainland UK advisers who are regulateed by the FSA)?

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Hickky

Apr 18, 2011 at 13:02

It seems to me that this is another case of thinking that all of us should have a perfect vision of the future. The fact that Keydata's counterparty was Lehman, that, at the time of due dilligence, was one of the major banks worldwide, meant that there probably little concern regarding that risk. If they were rescued by the fed, would the poor investers have lost anything? The real problem is that structured products are recommended by lazy advisers and advisery firms to individuals with little knowledge of investments. They promise that, the only thing at risk is the interest that could have been earned on clients deposits and were sold as safe investments. Therefore personally I would ban al sales of structured products to retail investors, as well as anything with a 'protected' capital feature, as the risk is totally unknown, with no knowldge of the future security of any counterparty. If RBS, HBOS and Lloyds were counterparties to an investment, where could that have gone if the bailout did not happen? I now believe that any complex internal structure of any 'product' is designed to benefit the provider, the salesman, then the client, in that order. Over complicated structures that have a tax advantage will probably be banned by the Revenue by the time it has had a chance to work.

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Martin Bryant

Apr 18, 2011 at 13:14

I see the FSA criticised the N&P for ignoring a June 2007 internal compliance report, stating; "N&P had the opportunity to address the failings identified in the June 2007 report, which could have avoided a large number of unsuitable sales and resultant customer detriment. N&P failed to do this and, in the FSA's view, this significantly increased the seriousness of N&P's failings."

Surely this serious criticsim must also apply to the FSA given that they identified extreme concerns about the marketing and distribution of the Keydata Secure Income Bond and Secure Income Plan in a 2007 thematic review, but failed to alert anyone to those concerns.

I suppose I shouldn't be surprised that different rules apply to the regulator.

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Phil Castle

Apr 18, 2011 at 13:21

Hickky - Keydata's problems had absolutely NOTHINg to do with Lehamans. The first problem was over ISA status (i.e. some of them had been structured for less than 5 years), there second problem was David Elias dying with £103million pounds missing and their third was that it now appears the Life Settlement funds they had established were NOT the mature funds they said they were, nor were the right policies bought for the model they said they were running....

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Premier Shareholders Group

Apr 18, 2011 at 13:50

@ Tim Page

Will these be the “unregulated offshore advisers” as used by Isle of Man based investment fund providers to assist in the sales of their "experienced investor fund” products?

If so they are not only “unregulated, but also "unqualified", "unregistered " and "uninsured".

This lack of credentials does not prevent the fund directors representing these impersonators to pensioners as “professional” investment advisors.

Any wonder that your industry has a less than savory reputation?

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Kevin Murphy

Apr 18, 2011 at 14:02

To Premier Shareholders Group

Think you are missing the point - if you are mis-sold a retail product by Tesco - it is Tesco who have to provide redress - not Morrisons, Sainsbury and all of the other retailers.

I've got nothing against fines for wrongdoers but I never sold this product - so why are me and my clients having to pay for it through higher levies and other regulatory costs? We don't get a share of the 'spoils' when these schemes do what was expected - why do we pick up the tab when they go wrong?

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Premier Shareholders Group

Apr 18, 2011 at 14:09

@ Tim Page you write …

“…what benefit you thought your comments would be on this blog (which is aimed at mainland UK advisers who are regulateed by the FSA)?”

Correct us if wrong but don’t many mainland FSA regulated IFAs also recommend funds (and other investment products) based on the Isle of Man, Jersey and Guernsey?

In this situation the FSA “regulates” the mainland IFA – but has no jurisdiction over the product provider.

When things go wrong what happens?

For example: When a “product provider” makes an untrue claim in the terms-and-conditions which the IFA (mistakenly) believes to be true and communicates this information to his client who then buys the product only to discover later that he/she was misled – and that his/her bank transfer had been obtained by deception.

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Hickky

Apr 18, 2011 at 14:12

Phil, I understand, the reclessness of the Keydata management, and this cannot be condoned. How can anyone do full due dilligence when there are so many people out there playing fast and lose with clients money. The simple structures of unit trusts or OECS without protections seem to me to be the way to go forward, as any protection, or enhancement measures seem to me not to benefit the client first, but either make the product more opaque, and provide more opportunities for the sponsoring company to make more in hidden charges, or make a proposition that looks, on the face of it, too good to be true in order to enhance sales to inexperianced investors. Warnings in the key features documents, or prospectus are seldom looked at by clients, however clients trust the individual or orginisation that recommended these products. N&P abused that trust. All I am saying is these type of products with some type of capital protection are obscuring the fact that all investment carries some risk, and clients should be prepared to accept that risk in order to gain greater potential return, not a proposition that to a client says 'you can get this potential return without undue risk to your capital' As we can see, this is not always true, therefore all these capital protected products should be banned. The banks and building societies are the biggest sellers of these things, often to account holders with no advice regarding suitability, but from a leaflet in the branch. Ban them I say!

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Phil Castle

Apr 18, 2011 at 14:22

Hickky - I was not condeming or condoning, I was just correcting the Lehamn's comment error for the purpose of betetr understanding. As to the rest of your latest post, I think I understand your point.

I'm not really pro banning anything, whetehr that be smoking (I am a non smoker), hunting (I have never hunted), drugs (I only use alcahol) and my opinion of banning investments is the same, i.e. don't ban, educate better.

A traffic light system for products and services witha default being "RED" serious warnings for anything that is unknown/ublooked at is what I would prefer to see. I do think there are products other there that should no be marketed to the general public and they should be red products rather than banned.

As far as protection is concerned, I think with increased use of wraps, we may see bolt on insurances to smooth out fluctuations and offer elements of protection in 5-10 years time as whilst insurance is a waste of money if you don't need to claim, it can be very useful when things go extremely wrong (FSCS is effectively an unfunded insurance for consumers, while PI protects an advisers business, but only to an extent)

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Alan Lazenby

Apr 18, 2011 at 14:30

To Premier Shareholders Group

Caveat Emptor, let the buyer beware.

On the whole, Regulated UK Financial Advisers have their clients best interests at heart, a long-term relationship earns them more money than a one hit wonder.

I am sorry, but I have little sympathy for people taking very high risks with unregulated off shore providers, these are usually based on greed or why would you be investing in off shore companies with so many excellent regulated UK ones available? that in itself is an obvious risk, as are boiler room shares!

We all bemoan the FSA but they have a job to protect the public, but to actually invest in products that have no protection and are non-UK based?

There is a good reason why the big banks rattle on about taking their head offices away from the UK but never do anything about it, its called credibility Would you do large business volumes with the bank based in the Bahamas? Or would you trust the regulatory system in the UK instead?

The client has a massive responsibility when dealing with products that are Not regulated from advisers that are also NOT regulated. To blame the professionals here for the actions of salesmen is like blaming British Gas for old ladies being robbed by the dodgy gas readers.

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Michael Brown

Apr 18, 2011 at 14:43

@Tim Page

CEO - Matthew Bullock. Head of Marketing - same as now

Head of Compliance Joyce Rahn, retired. Head of IFA sales - Judith Dove left company later.

Board of directors also signed this off.

So as earlier stated go get them, they are the ones responsible and for the initial 5% commission with no trail. Also the plan was marketed with N&P all over it.

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Premier Shareholders Group

Apr 18, 2011 at 14:45

@Bob Donaldson

Hi Bob

The only people who are “greedy” is the Isle of Man based Premier Low Risk Fund plc which sold an “experienced investor fund” using phony IFAs to assist in distributing misleading sales brochures to hundreds of pensioners.

The Premier Fund “invests” in traded endowment policies and is allowed by its company’s Articles of Association to borrow (in this case from RBS International) up to 50% of the fund’s net asset value to acquire these “assets”.

Since when has any investment fund been allowed to describe itself as “Low Risk” when it uses bank loans up to 50% of its value to speculate in any asset - including TEPs?

Also the FSA (UK) rule that all “redemption penalties” (in this case a huge exit penalties required within two years of the fund’s launch to keep it afloat) should be adequately disclosed to investors BEFORE they transfer their money to any investment product.

Try telling that to the Isle of Man regulator!

The PSG can (and will) provide several more pages of incontrovertible evidence in support of all allegations …

Yes the PSG is “extremely upset at what has happened” but the PSG would suggest that you should be equally "upset" at having the good name of your industry being dishonoured by this conduct.

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Premier Shareholders Group

Apr 18, 2011 at 15:13

@ Alan Lazenby

The principle of “Caveat Emptor” does not apply to old age pensioners when they are sold a “low risk” investment product which is not low risk. This principle is known as deception!

However it is interesting that you appear to be saying that all unregulated offshore products are “high risk” by nature. Perhaps financial products based on the Isle of Man, Jersey and Guernsey (and other places) should have a “health warning”?

Many UK expats find it impossible to open a UK bank account – so they are driven into the evil clutches of offshore banks. Similarly even though you may “buy” a financial product based in UK if this product is missold (either by the product provider’s misleading brochures or an IFA telling porkies) outside the UK then the FSA has no jurisdiction over the transaction.

This is why many UK expats resort to buying outside the UK.

The PSG does not wish to cause you offence and is NOT blaming professional IFAs based in the UK – but it is blaming non existent regulation of financial products based on the Isle of Man (and other places) which are sold using misleading company names and sales brochures with the assistance of phony IFAs - who are represented (to pensioners by the product provider) as “professional” investment advisors.

This conduct will impact on your credibility in the UK.

PS: Agree with your comment about the “big banks” moving away from UK

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Alan Lazenby

Apr 18, 2011 at 15:43

Caveat Emptor is relevant to all age groups.

I am sorry to hear of your case, and if it were with a regulated firm then you would have the protection given in such cases.

To be able to invest money for a return based on some form of capital risk, however low, would indicate that the person involved had invested before or spent time in a good job earning the money over many years. In my experience clients with money were savy before they came to me, thats how they built up money in the first place. My job is to increase understanding.

If you are retired you have to take even greater care with financial decisions, and if you are unsure then that is what family are for.

My father is in his seventies, retired and an untrusting sole; rightly so. His age just means that he has to be more careful with his money as he cannot earn it back. As far as being a pensioner, he would have a duck fit if I tried to treat him with kid gloves. He may be a bit crumbly but his marbles are all there.

As to the risk of off shore investing, any thing that is not UK based, I would give it a high risk rating, thats my opinion.

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Premier Shareholders Group

Apr 18, 2011 at 17:18

@ Alan Lazenby

You write: - "Caveat Emptor is relevant to all age groups."

Wrong! This defence is increasingly found wanting, particularly when elderly people are conned, and it now has little value in the Courts.

You appear to suggest that both product provider and IFA can lie through their back teeth to obtain bank transfers from pensioners and it is up to a seventy year old widow living alone with no family to discover that they are!

What a condemnation of the financial services industry.

No wonder it is no held in such low esteem.

And this is the “reputable” UK industry.

God help those who get involved with the “offshore” industry!

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Premier Shareholders Group

Apr 18, 2011 at 17:35

@Kevin Murphy.

You write:- "Think you are missing the point - if you are mis-sold a retail product by Tesco - it is Tesco who have to provide redress - not Morrisons, Sainsbury and all of the other retailers."

So your “point” is that a “product provider” can produce and circulate false documents which cause members of the public to transfer money directly into the “product provider’s” bank account?

And providing the “product provider” claims that the “financial product” was “supplied” through an IFA (or other totally incompetent third party) then the “product provider” can avoid prosecution by transferring the blame onto the third party, even if the third party only assisted in circulating the “product provider’s” false documents and never handled the public’s money.

So why be an IFA? A job forever plagued with the risk of prosecution.

Better be a “product provider” and become mega rich with no problems!

No wonder there are so many of them hiding away in the Irish Sea.

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You must be joking

Apr 18, 2011 at 17:36

A message for the FSA(I assume someone from Canary Towers actually reads citywire) - this WILL actually STOP another mis-selling scandal by banks/building societies:

There are a number of deposit takers currently offering market beating deposit accounts on condition that the depositor takes out an investment bond alongside the deposit account.

Now unless you're happy with the 'reason why' Fred Smith has an investment bond invested in whatever funds being "Fred wanted to get our best deposit rate" then surely you should ban this practice immediately???

Come on, be bloody proactive for a change! Close the door and keep the horse in the stable... it'll save us all millions in the long run!!!

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Duncan Carter 2

Apr 18, 2011 at 22:01

@Premier Shareholders Group

I don't think any decent, professional financial planner would have anything but sympathy for those investors who lose as a result of dishonest actions which would seem to be the case with yourselves. I just think you've picked the wrong forum to air your grievances as most people posting entries are quite rightly, feeling pretty aggrieved themselves.

The theme here is where a series of regulated firms have, over several years caused losses to clients but which could have and probably should have been prevented.

My firm did not recommend Keydata/Lifemark but we have to pay a supplementary levy to compensate for those who did - clearly such costs will eventually work their way back to clients who did not invest in Keydata either. Is this fair - probably one for a discussion on ethics?

It appears as if you are non-resident in the UK and have a grievance with an IOM firm. It would seem as if the regulatory structure there also has some issues!

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Premier Shareholders Group

Apr 19, 2011 at 09:03

@Duncan Carter 2

It appears that the consensus of opinion on this blog is that because of feeble regulation and sometimes fraudulent sales methods (including exaggerated claims) it is not the practice of reputable and responsible UK based IFAs to recommend financial products based on the Isle of Man, Jersey and Guernsey.

And it is contributory negligence for any person (particularly pensioners who should know better because they have had more years in dealing with electricity bills and mortgage repayments and are therefore more financially savvy) to be foolish enough to ignore this advice and deposit/invest their life savings on these island’s

In these circumstances do all UK based IFAs now boycott these products?

The PSG sympathizes with responsible IFAs who are forced to help finance the FSA's prosecution of crooks.

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John Whipple

Apr 19, 2011 at 10:07

PSG - You misunderstand the terminology "Experienced Investor" does not mean you have knocked around for a while it is code for "High Risk" ( in my terms I would say very high risk) only to be considered by the wealthy (I would say the very wealthy) and if you were to invest you should consider any return, even of original capital as a win.

There are reputable offshore companies many of whom are subsidiaries of UK insurance companies or very large EU based ones these offer low to moderate to high risk investments within a number of wrappers designed for a number of outcomes and all fairly straight forward and transparent and all available via authorised and regulated advisers all of whom can be checked up upon and referenced for security and peace of mind..

I do concur with Duncan C 2 that it is sad to hear from investors such as your self and your group but it does happen all to often and this is despite all the modern day communications available even a quick Google might have started alarm bells ringing and led to further enquiry perhaps to a proper independent financial adviser who pays all the huge fees, levy s and other sundry compliance costs heaped upon us by the regulator.

You might be interested to know that this year the FSA will cost over £500 million to run up more than 10% the FOS £100 million to run up 15% and FSCS ??? million we don't know and nor do they they just send us the bill when it suits them.

So you can see we the regulated and authorised need your business to carry on and pay these bills and you guys should be seeking us out as you need the protections afforded by using us.

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EX Adviser

Apr 19, 2011 at 14:10

This Michael Brown seems tio know alot about the set up and names of background staff was you one of the advisers selling this plan and if so was you made to do it??????

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Michael Brown

Apr 19, 2011 at 14:47

Ex Adviser

Not afraid to use my name unlike you?.

As the top performing IFA at the society for over 5 years,this included the time when I was part of the IFA arm that was merged into the "new IFA" organisation you could say that I sold many of these plans. How far from the truth.

If you send me an email to michael.brown@rbaifa.co.uk with your contact number then you I can discuss with you?

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Jonathan Kirby

Apr 19, 2011 at 14:58

An interesting and enlightening blog with some real common sense talked.

You may like to see a snippet from the BBC website about Gordon Brown (or BORN DO WRONG as I prefer the anagram) wanting to become head of the IMF.

"Mr Brown made a speech in the US last week, in which he said he admitted made a "big mistake" in setting up the UK's Financial Services Authority in the 1990s without appreciating the complex relations between global institutions".

Even Gordon admits the FSA was a BIG mistake.

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EX Adviser

Apr 19, 2011 at 15:36

As I have now left the industry my name is not relevant. As you point out you were the top performing Adviser so why did you leave in the manner you did???

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Michael Brown

Apr 19, 2011 at 15:51

Why don't you ring me and find out?

And what manner did I leave in then?

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Stephen Cooper

Apr 19, 2011 at 16:06

@ Ex Adviser @Michael Brown

Please refrain if you can from using these blogs for dialogue just between the two of you - please remember that others are reading them relating to the proper subject matter.

That said, MB, what does 'you could say that I sold many of these plans. How far from the truth' actually mean?

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Michael Brown

Apr 19, 2011 at 16:17

4 for a total of £21,000 in monioes not fees, and it is nice for people to use their name and not hide.

As the question was personal I did not feel that a personal response was necessary to the whole world.

Please see my previous email re for Xadviser to contact me.

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Charles Rickards

Apr 19, 2011 at 16:48

Presumably, N&P were not the only Financial advice service to sell Key Data. So are the other criminals that sold this obviously in appropriate plan going to be fined by the FSA and the publicly castigated by their saintly peers. If it hadn't gone wrong, then no one would be moaning or revelling in the misfortune of N&P. They weren't perfect, but who can hold their hand up and say they never got it wrong?

Challenge all of us have in Financial services is making a decent living with the constant risk that what we thought was best for the client remains so!

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Premier Shareholders Group

Apr 19, 2011 at 18:17

The Premier Low Risk Fund plc paid those who they refered to as "pofessional" investment advisors (who were NOT qualified, licenced or regulated) via a shell company registered in the British Virgin Islands to assist in circulating misleading documents.

These "commissions" were never disclosed by anyone to anyone but were thought to be considerable. Income tax did I hear you say?

Decent living? Depends how you define "decent" and certainly not "decent" for the pensioners who lost over half their savings to recover their bank transfers.

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Premier Shareholders Group

Apr 19, 2011 at 18:30

@John Whipple

You write: - “PSG - You misunderstand the terminology "Experienced Investor" does not mean you have knocked around for a while it is code for "High Risk" ( in my terms I would say very high risk) only to be considered by the wealthy (I would say the very wealthy) and if you were to invest you should consider any return, even of original capital as a win.”

Agree, Agree Agree!!!

So please explain why an “experienced investor fund” can be marketed as the Premier Low Risk Fund if it is in fact a “high risk” (or as you say “very high risk”) fund?

Trading under a false name is a criminal offence.

You also write:- “There are reputable offshore companies”

Regulated by who?

The PSG advice to all UK based IFAs is :- NEVER EVER recommend any of your “clients” to invest or deposit a single cent on the Isle of Man, Jersey and Guernsey.

Investors/depositors simply DO NOT HAVE PROTECTION.

For more details email the PSG office.

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Phil Castle

Apr 19, 2011 at 18:34

@ PSG as you have implied the "investment advisers" you used were "NOT qualified, licenced or regulated". The FSA have a register of all individuals and firms. It can be found here

http://www.fsa.gov.uk/Pages/register/index.shtml

IFA promotions maintains a list of advisers qualifications too I think, so you can find an adviser with the relevant qualifications for what you want them to do.

Being Authorised and Regulated does not mean things cannot go wrong with regulated firms or individuals, but at least there is a system to compensate (the FSCS) if you use a regulated firm and adviser. What some people also don't know is that currency handling firms are Authorised, but not regulated (i.e. no FSCS protection), so the starting point should be someone who is authorised, regulated and qualified for the work you want them to undertake.

To have a go at regulated advisers/firms for the sins of thre unregulated is somewhat unfair.

I am sympathetic to your plight, but it costs us as an industry enugh for what has gone wrong with regulated firms (Keydata for example) without being blamed for unregulated firms. It is the job of the FSA to protect UK consumers from scammers who are not regulated. We pay them to do that (through our FSA fees) the taxpayer pays nothing.

Please go and blame the FSA for any failures to regulate unregulated firms trying to do business in the UK.

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Phil Castle

Apr 19, 2011 at 18:37

@ PSG do you have a name please?

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Premier Shareholders Group

Apr 19, 2011 at 19:03

Phil Castle - The PSG respects and agrees with everything you say.

When a "product provider” describes persons given access to its product’s marketing documents (presumably after conducting due diligence) as "professional" investment advisors... pensioners have a tendency to believe this printed information and they do not expect these “professionals” to be unqualified, unregulated and unregistered.

When you last visited your doctor/dentist/lawyer did you ask to inspect their qualifications and then contact the relevant universities to check their degrees on display were genuine?

This (now rather protracted) discussion is to warn UK based IFAs that Isle of Man based funds may not always be “as described” - and if things go wrong investors will receive little or no protection from the Island's government or regulatory authorities.

Of course everyone should use properly qualified/regulated IFAs like you. And this is what the pensioners were told they were doing.

Lessons have now be learned and the PSG will continue its campaign to warn ALL investors, particularly pensioners, about the real dangers in investing or depositing money “off shore” where there is no proper regulation of financial product providers.

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Premier Shareholders Group

Apr 19, 2011 at 19:14

@ Phil Castle

The PSG is composed of pensioners, average age over seventy including widows living alone, who were persuaded to transfer their life savings to the Premier Low Risk Fund plc. The PSG also has a fifty page dossier of evidence in support of all allegations.

The PSG has an office, email address and is in the course of launching a website.

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John Whipple

Apr 21, 2011 at 14:53

PSG - Phil C has given further sound free advice to you and your group.

As to marketing puff - all advertising is just that pure puff.

Risk is a subjective thing. It means different things to different people and risk rating can start at different levels. This is why you need help. The experience and knowledge of a proper investment IFA who understands the market. Understands the terminology and understands the the products and how they work. Not just the advertising puff but right down in the basement where it is dark and sometimes very dirty. Having said all that there are always criminals

and others who become tempted and things sometimes just go plain wrong.

That is why you should use a authorised and regulated IFA.

As to which off-shore companies to do business with that is our worry not yours.

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Premier Shareholders Group

Apr 21, 2011 at 18:22

IFAs wishing to learn more about the financial services industry outside the safety of the UK should visit Spanish lawyer Antonio Flores blog and read:-

Equity Release Contracts Full of Cracks (I) April 18th, 2011

http://belegal.com/blog-by-antonio-flores/

OK; so this is Europe not the UK (lol) but there is some sound information here. Anyone care to comment?

Maybe the PSG can persuade the "New Model Advisor" to publish it?

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Premier Shareholders Group

Apr 21, 2011 at 18:39

@ John Whipple. You write: - “As to which off-shore companies to do business with that is our worry not yours.”

The PSG takes this to mean that you will invest your “clients” money in off-shore companies regardless.

It is in the public interest that the PSG should “worry” that UK based IFAs will disregard the horrendous experience suffered by elderly people who were advised (via brochures produced by a product provider) to “invest” in a jurisdiction where so-called “regulation” is feeble.

Any UK based IFA recommending investment vehicles on the Isle of Man, Jersey and Guernsey is taking an unnecessary risk with their “clients” money - a risk which old people in particular do not deserve to be exposed to.

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John Whipple

Apr 21, 2011 at 21:07

PSG - You have received considerable advice from this blog from some of the very best and experienced IFAs please re-read and do some research before you continue in this manner.

Broad sweeping statements concerning whole jurisdictions are not helpful nor are they true.

There is good, bad and indifferent in every sector of any industry be it doctors, solicitors or investment providers or advisers.

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Premier Shareholders Group

Apr 21, 2011 at 21:34

@John Whipple

The PSG has made it clear that it agrees with almost every comment placed on this column - and is privileged and grateful to receive so much professional advice.

Obviously there is good, bad and indifferent amongst all investment providers or advisers in the UK.. But once you step outside the protection of the UK regulator (the FSA) it's a jungle and pensioners need all their wits about them to survive.

Highly recommend that you visit:-

http://belegal.com/blog-by-antonio-flores/

There are more websites that also feature some of the horrors that have been encountered by thousands of British ex-pat pensioners who thought that they still enjoyed the protection of the FSA – and found that they didn’t!

They should be warned.

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Premier Shareholders Group

Apr 21, 2011 at 21:46

@John Whipple

The PSG has made it clear that it agrees with almost every comment placed on this column - and is privileged and grateful to receive so much professional advice.

Obviously there is good, bad and indifferent amongst investment providers or advisers in the UK.. But once you step outside the protection of the UK regulator (the FSA) it's a jungle and pensioners need all their wits about them to survive.

Highly recommend that you visit:-

http://belegal.com/blog-by-antonio-flores/

There are more websites that also describe the horrors that have been encountered by thousands of British ex-pat pensioners who thought that they still enjoyed the protection of the FSA – and found that they didn’t!

They Should be warned

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