Offshore investment policy rip-off

[Dapple Grey]

I was persuaded to buy an offshore investment policy by a 'financial advisor' from a farang company in Bangkok a few years ago. The full extent of the charges and the lock-in arrangements were never explained clearly to me and I am now considering taking legal action to retrieve the funds.

Would be interested to hear if anyone has had similar experiences in getting ripped off or in taking legal action.

Cheers!

[Aussieroaming]

Didn't you read the terms and conditions before you signed?

[Dapple Grey]

The full terms and conditions were only sent after I signed and are complex such that even with the information, the charges and restrictions are difficult to assess. I was provided with abbreviated and partitioned information together with obfuscatory language and information heavily biased towards potential positive outcomes.

[The Dancer]

The full terms and conditions were only sent after I signed and are complex such that even with the information, the charges and restrictions are difficult to assess. I was provided with abbreviated and partitioned information together with obfuscatory language and information heavily biased towards potential positive outcomes.

Seriously, you signed without knowing what you were getting into?

That wasn't bright and, obviously, having got your signature they would then make sure the conditions were such that your money was their's.

I wouldn't waste good money on lawyers (that's an oxymoron right there) chasing after bad. Take it as a lesson learned and move on.

[Aussieroaming]

The full terms and conditions were only sent after I signed and are complex such that even with the information, the charges and restrictions are difficult to assess. I was provided with abbreviated and partitioned information together with obfuscatory language and information heavily biased towards potential positive outcomes.

Seriously, you signed without knowing what you were getting into?

That wasn't bright and, obviously, having got your signature they would then make sure the conditions were such that your money was their's.

I wouldn't waste good money on lawyers (that's an oxymoron right there) chasing after bad. Take it as a lesson learned and move on.

I think the term buyer beware comes to mind. If you can't understand the terms and conditions of a contract you have the right to employ somebody to read and explain the contractural terms to you.If you had done that you might have had recourse if you had paid for and been given inappropriate advise. Anyway good luck with your legal joust, nobody likes to be touched up financially.

[lust]

You don't read. You sign. You lose.

[MaeJoMTB]

The financial advisor was working illegally in Thailand (no work permit).

The financial company was not registered with the Thai SEC.

How do I know these things?

Foreigners in Thailand aren't allowed to work in these areas.

They are all criminal scammers ....... every one of them.

Chances of compensation ...... ZERO.

Never do business with foreigners in Thailand without seeing (and reading) their work permit first.

Edited December 16, 2015 by MaeJoMTB

[wordchild]

Close to zero chance of a successful legal action in Thailand, dont waste your money!

If its just a case of high charges and a long lock in i am afraid that is exactly what all offshore based advisors seem to offer their clients as standard (thats one of the main reasons never to use them).

You could try reporting them to the Thai SEC but, as its an offshore product and you are not Thai (I assume) there is a limit as to what they can/will do. They could issue a warning on the firm but that wont have much impact as many farang financial advisors operating in Thailand are already on the SEC caution list anyway. very likely they are already here http://market.sec.or.th/public/idisc/en/ViewMore/invalert-head?PublicFlag=Y

If you have reason to beleve there has been fraud you could try to approach the regulators in the country where the product you bought is based eg if UK, talk to the FCA. Best bet maybe go to the press and tell the advisors thats what you are going to do; the Daily Mail, in the UK, regularly takes up cases of this kind and has some success, devere,s offshore practices have been exposed a number of times by them.

Edited December 16, 2015 by wordchild

[AyG]

At this point, I'd be rather more concerned about what the investment is invested in. Is it something reasonable? Or is it some alternative investment such as forestry or student property or commodities or hedge funds? Something that's likely to lose a lot, of not all of your money. And who manages the investment? Is it some reputable (or at least, well known) fund management company?

If you're lucky, you'll reach the end of your lock-in period and be able to transfer the investment elsewhere with some value remaining after all the fees. (Don't count on any investment growth, though.)

In the mean time, look closely at the penalties for early withdrawal and see whether they're worth the cost - they may well be.

[Misty]

Close to zero chance of a successful legal action in Thailand, dont waste your money!

If its just a case of high charges and a long lock in i am afraid that is exactly what all offshore based advisors seem to offer their clients as standard (thats one of the main reasons never to use them).

You could try reporting them to the Thai SEC but, as its an offshore product and you are not Thai (I assume) there is a limit as to what they can/will do. They could issue a warning on the firm but that wont have much impact as many farang financial advisors operating in Thailand are already on the SEC caution list anyway. very likely they are already here http://market.sec.or.th/public/idisc/en/ViewMore/invalert-head?PublicFlag=Y

If you have reason to beleve there has been fraud you could try to approach the regulators in the country where the product you bought is based eg if UK, talk to the FCA. Best bet maybe go to the press and tell the advisors thats what you are going to do; the Daily Mail, in the UK, regularly takes up cases of this kind and has some success, devere,s offshore practices have been exposed a number of times by them.

Do consider reporting them to the Thai SEC regardless of whether they are already on the SEC's list. It doesn't matter that you are not a Thai citizen, as long as you are a Thai resident and/or the entity involved is a Thai company, you have a case under Thai law.

In some cases the SEC has started to file criminal charges against individuals involved, so there can be more bite than merely going on a list. In any case, the SEC should be informed that this is continuing to go on under their watch. Otherwise, the SEC may get the impression that the problem has been solved.

[Misty]

The full terms and conditions were only sent after I signed and are complex such that even with the information, the charges and restrictions are difficult to assess. I was provided with abbreviated and partitioned information together with obfuscatory language and information heavily biased towards potential positive outcomes.

Seriously, you signed without knowing what you were getting into?

That wasn't bright and, obviously, having got your signature they would then make sure the conditions were such that your money was their's.

I wouldn't waste good money on lawyers (that's an oxymoron right there) chasing after bad. Take it as a lesson learned and move on.

I'd go easy on the OP. The marketing of these types of schemes can be extremely clever, but also false or misleading at best. From what I've seen, this sort of thing is far more common than you might imagine.

Edited December 16, 2015 by Misty

[meatboy]

The full terms and conditions were only sent after I signed and are complex such that even with the information, the charges and restrictions are difficult to assess. I was provided with abbreviated and partitioned information together with obfuscatory language and information heavily biased towards potential positive outcomes.

Seriously, you signed without knowing what you were getting into?

That wasn't bright and, obviously, having got your signature they would then make sure the conditions were such that your money was their's.

I wouldn't waste good money on lawyers (that's an oxymoron right there) chasing after bad. Take it as a lesson learned and move on.

a fool and his money are soon PARTED.

much better to give it to the wife.

[wordchild]

At this point, I'd be rather more concerned about what the investment is invested in. Is it something reasonable? Or is it some alternative investment such as forestry or student property or commodities or hedge funds? Something that's likely to lose a lot, of not all of your money. And who manages the investment? Is it some reputable (or at least, well known) fund management company?

If you're lucky, you'll reach the end of your lock-in period and be able to transfer the investment elsewhere with some value remaining after all the fees. (Don't count on any investment growth, though.)

In the mean time, look closely at the penalties for early withdrawal and see whether they're worth the cost - they may well be.

this is very good advice, its very important to focus on what the underlying investment is. I am guessing you are in something called a portfolio bond or some other kind of insurance company wrapper, check what funds you are invested in within the wrapper. As AYG says it may be worth paying the charges and exiting the whole thing, however if that is not practical you should be able to switch the underlying funds (if you are not happy with them) into more suitable (or even less expensive) products. Edited December 16, 2015 by wordchild

[GuestHouse]

I sometimes think I rant a bit too much about the carpet bagging scum that calls itself 'expat FAs' in Thailand.

I sometimes think I over do the warnings not to trust any FA in Thailand.

And then I read sorry tales like the OP relates and feel I'm not giving enough warnings or ranting as much as I ought.

[GuestHouse]

At this point, I'd be rather more concerned about what the investment is invested in. Is it something reasonable?.

I think the bigger issue is - what is the fee structure and how often are the OP's funds being switched/moved to generate fees?

[AyG]

At this point, I'd be rather more concerned about what the investment is invested in. Is it something reasonable?.

I think the bigger issue is - what is the fee structure and how often are the OP's funds being switched/moved to generate fees?

Frankly, I beg to differ. There are plenty of cases of people here being conned into investing in quite frankly ludicrous investments which have little chance of returning even the original capital, e.g.

LMIM:

http://www.thebigchilli.com/features/the-lmim-collapse-one-year-later-an-investor-speaks-out

Standard Morgan (Thailand)

http://www.nationmultimedia.com/national/Investment-scam-hits-over-1000-victims-30215157.html

Plenty of others, but I can't be bothered at the moment to dig out links.

100% loss is far less significant than fee structure.

[gamini]

my broker is employed by ANZ. If you invest with a bank broker you should OK. I asked him about LMN and he said they never invest in such funds.

[cyberfarang]

The full terms and conditions were only sent after I signed and are complex such that even with the information, the charges and restrictions are difficult to assess. I was provided with abbreviated and partitioned information together with obfuscatory language and information heavily biased towards potential positive outcomes.

Why did you get involved in something you don`t understand? One born every minute. Be safe and stay with the regular banks.

[VBF]

I sometimes think I rant a bit too much about the carpet bagging scum that calls itself 'expat FAs' in Thailand.

I sometimes think I over do the warnings not to trust any FA in Thailand.

And then I read sorry tales like the OP relates and feel I'm not giving enough warnings or ranting as much as I ought.

Absolutely - keep ranting!

As regrettable as it is, one has to assume that anyone set up as an IFA in Thailand is totally crooked in every way. If you find one who isn't, and perhaps they do exist, then you've struck gold!

I personally know 3 IFAs in Thailand, 1 American, 2 British of whom one is allegedly "regulated" in Cyprus the others non-regulated.

One of them gave me some investment advice years ago - I passed this advice on to my UK, FCA regulated IFA who didn't stop laughing for a week at the choice and combination of funds!

A good friend took this person's advice being told he would make 150% in 5 years. The funds lost 60% of their value - he then found he couldn't even get the other 40% out!! And those figures are AFTER the horrendous fees that he was charged!

Because this "adviser" is not regulated, there's absolutely no comeback and he continues to "advise" whoever he get get his hands on.

Meanwhile, my regulated funds, made modest, realistic gains in the same period - if i want to cash them in, it will take me about 48 hours...and I can sleep at night!

BTW, I'm not saying that to brag, just to illustrate the point which is..........Caveat Emptor - to the max!

Edited December 16, 2015 by VBF

[GuestHouse]

At this point, I'd be rather more concerned about what the investment is invested in. Is it something reasonable?.

I think the bigger issue is - what is the fee structure and how often are the OP's funds being switched/moved to generate fees?

Frankly, I beg to differ. There are plenty of cases of people here being conned into investing in quite frankly ludicrous investments which have little chance of returning even the original capital, e.g.

LMIM:

http://www.thebigchilli.com/features/the-lmim-collapse-one-year-later-an-investor-speaks-out

Standard Morgan (Thailand)

http://www.nationmultimedia.com/national/Investment-scam-hits-over-1000-victims-30215157.html

Plenty of others, but I can't be bothered at the moment to dig out links.

100% loss is far less significant than fee structure.

Then I'm sorry AyG, while I agree whole heartedly with many of the posts you make on financial matters and appreciate your candid examination of issues that can seriously damage expat investor's 'finical health'.

When it comes to profits for IFAs, cycling investments through fund transfers has to be the big risks.

An IFA can present 20 solid funds to his investor, declare hand on heart, or indeed in a court of law, that he only every invests investor's money in solid, top league and star rated funds - only to make a fortune in fees by constantly transferring investor's money between funds and raking in the percentage transfer and introduction fee on each deal.

[chiang mai]

One of the many problems with using an IFA in Thailand is that they are not regulated here, even if they are regulated in their home base, An expat firm of IFA from the UK may have excellent credentials and accreditation in the UK and then go on to open an office in say Singapore where they are also regulated. But the second their salesman sets foot in Thailand he is not obliged to follow any of the rules that he must follow in Singapore or the UK, simply, it's a question of where the advice is given.

But I'm somewhat sympathetic to people who fall foul of these guys because Thai resident UK expats no longer have access to UK based IFA's, they just wont do business with us any more, I know, I've been trying to find one for months.

EDIT to add: so when the Hong Kong and Singapore based IFA rocks up to your door and tells you how his firm is based in the Square Mile and that he's regulated by XY and Z and would you like to come to a drinks reception at the Marriot, don't start to feel all warm and comfy, be aware that he can sell you the Golden Gate as an investment and that's probably OK because he's not regulated in Thailand.

Edited December 16, 2015 by chiang mai

[KittenKong]

I think the OP should report the matter to the SEC and also to his local consumer protection office. It may also be worth sounding out the local tourist court. One or the other of them may be able to do something.

On a general basis when it comes to money I assume that everyone in Thailand (regardless of skin colour) is lying to me and only interested in lining their own pockets, and that way I don't go far wrong.

[AyG]

I think the OP should report the matter to the SEC and also to his local consumer protection office. It may also be worth sounding out the local tourist court. One or the other of them may be able to do something.

Why? The OP, most regrettably, entered into a binding legal contract of his own free will.

[brewsterbudgen]

If the offshore investment is with a UK/IOM regulated vehicle like a Skandia Investment bond, in GBP, even though it was set up by a Thai based Wealth Consulting firm, is there any comeback?

[chiang mai]

My opinion only - that's the difference between the advice and the product, if the advice was given and received in Thailand I would say no there is no come back possible.

[fletchsmile]

At this point, I'd be rather more concerned about what the investment is invested in. Is it something reasonable?.

I think the bigger issue is - what is the fee structure and how often are the OP's funds being switched/moved to generate fees?

Frankly, I beg to differ. There are plenty of cases of people here being conned into investing in quite frankly ludicrous investments which have little chance of returning even the original capital, e.g.

LMIM:

http://www.thebigchilli.com/features/the-lmim-collapse-one-year-later-an-investor-speaks-out

Standard Morgan (Thailand)

http://www.nationmultimedia.com/national/Investment-scam-hits-over-1000-victims-30215157.html

Plenty of others, but I can't be bothered at the moment to dig out links.

100% loss is far less significant than fee structure.

Then I'm sorry AyG, while I agree whole heartedly with many of the posts you make on financial matters and appreciate your candid examination of issues that can seriously damage expat investor's 'finical health'.

When it comes to profits for IFAs, cycling investments through fund transfers has to be the big risks.

An IFA can present 20 solid funds to his investor, declare hand on heart, or indeed in a court of law, that he only every invests investor's money in solid, top league and star rated funds - only to make a fortune in fees by constantly transferring investor's money between funds and raking in the percentage transfer and introduction fee on each deal.

I think the point AyG is making is that while fees can result in a poorly performing portfolio and severely detract from returns, they rarely wipe out a portfolio or most of the money invested. Unscrupulous advisers will often churn funds to generate higher fees and commissions for themselves, but this will rarely wipe out a portfolio completely. Even the adviser knows that he needs to maintain a certain value for the funds to keep being able to churn the funds and extract those fees, as well as pay the ongoing fees. Like keeping a patient on life support so he that he can afford to keep paying the medical bills.

On the other hand the adviser sticking money into inappropriate investments or illiquid investments or fraudulent investments can cause significantly more damage to the extent of wiping out your whole investment.

Neither are desirable. But fees and penalties rarely wipe out your investment completely on these type of products.

In OP's case the first thing I'd want to know is exactly what he's invested in. Fees and penalties are after that as to whether he should get out of it. If the investments themselves are reasonable it's possible that the best thing might be to wait until penalty periods lapse, or he may find that it's better to suffer the penalty and exit as soon as possible. On the other hand if the investments are totally undesirable he wants to get out of there ASAP regardless of penalties

So to OP:

First understand what you're invested in - particularly what the underlying investments are

Then understand how your offshore wrapper works, what ALL the fees are, both ongoing and penalties to exit. These include monthly/quarterly fees, admin charges, switching costs, FX costs, transaction costs, exit costs, penalty costs etc

Without those basics it's difficult to help with what's the best course of action

Edited December 17, 2015 by fletchsmile

[fletchsmile]

As to legal recourse, unless we're talking hundreds of thousand of dollar it's probably not going to be worth the hassle. These policies are typically marketed with minimum amounts of USD 50k, sometimes lower. So likely OP will have to bite the bullet and write it off to experience.

In terms of foreigners being allowed to work here in this field there are few key points to consider:

1) On licencing, the firm itself should have a licence to operate in this field. They could then employ a foreigner in various capacities. The foreigner should have a work permit. Hence foreigners can legitimately work in the field, and there are some out there fulfilling these requirements

2) The individual concerned should have a licence and be qualified according to Thai regulations to sell a domestic product. This is very rare for a foreigner to hold and be qualified. Even Thais working in this field may not be qualified to actually sell although they are allowed to support the process. What it means is while they can be involved in the process the domestic product must actually be sold by a licensed and qualified person.

3) SEC which would be the likely regulator in this case mainly concerns itself with the protection of domestic investors investing in domestic products. They have different attitudes to someone buying a product offshore to onshore.

There are a lot more rules and regulations, but those are some of the basic principles to grasp.

It's also not difficult to see how people could play around in grey areas or misleading people who aren't informed as to exactly where they and their product sit in the whole scheme of things. Plus why these offshore portfolio bonds (OPBs) are sold to people rather than domestic products - Simply put it's too difficult for them to sell the domestic products.

If the firm was in Thailand. He can report them to SEC. They could then end up one the SEC's website as a warning to others. Then again the website isn't particularly useful for distinguishing real cases vs complaints. Anyone they receive a complaint against seems to end up there, regardless of severity and/ or substance . It also won't really help him seek redress.

OP could try the underlying policy provider, eg Skandia, Generali etc. But I wouldn't hold out much hope. Their relationship is with the FA. They'll focus on meeting all the regulatory requirements of running the policy. Not the sale and commission fee the FA tags on.

Edited December 17, 2015 by fletchsmile

[Dapple Grey]

Thanks for the interesting posts. Indeed it was stupid of me but I was lied to.

[AyG]

Thanks for the interesting posts. Indeed it was stupid of me but I was lied to.

You didn't mention being lied to in your opening post. In fact, there your complaint was "The full extent of the charges and the lock-in arrangements were never explained clearly to me ". That may be disingenuous, but it's not lying.

And if you were lied to, what evidence do you have? Recordings of the meetings? The lies in writing from the FA? If not, then at best it would be "my word, his word", so you'd just be wasting your time.

As fletchsmile intimates, at this stage what really needs to be looked at is (a) the underlying investments, and ( all the charges (initial, ongoing, termination). If you were to post both here I'm sure you'd get an opinion on just quite how bad your situation is.

Edited December 18, 2015 by AyG

[Dapple Grey]

I don't want to share details online but I do now know and understand the charges very well. The underlying funds are all from well known investment companies and have not been 'churned.'

I really wanted to hear if anyone had been similarly ripped off or had any experience in suing. I'm sure there must be people out there.