Fraudsters target British expats in retirement havens

In and around Spain, thousands are falling prey to advisers peddling financial scams and mis-selling investments

British citizens living abroad are being targeted by unscrupulous financial advisers for risky investment schemes and fraud.

Many pensioners hoping to live out their days in the sun have already been - or are in danger of being - defrauded out of their life savings, regulators and campaigners warn.

One expat group in Spain, weary of its community being repeatedly fleeced, has now posted warnings of 40 different investment scams on its website.

The same country's financial regulator is investigating 17,000 complaints of mis-selling.

Many of the investment operations targeting expatriates in Spain claim to be based and regulated in offshore jurisdictions such as Gibraltar. Some are not even registered, and only last week the Gibraltar Financial Services Commission issued a strong warning against an outfit run by British financial advisers in Spain.

"[We] have become aware of [an] entity, which claims to operate from premises in Gibraltar. This entity is not, and has never been licensed by the Commission to undertake any form of regulated business in, or from within Gibraltar," it said.

It is the latest in a long line of warnings by the GFSC about suspect companies.

The Commission urges consumers to tread carefully - "exercise the greatest possible caution before proceeding," it says - when getting involved with any financial advisers.

Its guidance to expats keen to invest money is littered with warnings. Headings such as "Do I need to be suspicious?" and "Protect yourself" offer reams of advice to ward off unscrupulous salesmen, while the golden rule is, "If it sounds too good to be true, it probably is".

British expatriates are ideal targets for chancers and conmen, warns David Marchant, publisher of the Miami-based Offshore Alert magazine. "A typical expat is financially successful," he says. "Also, being strangers in a foreign land, expats tend to work and socialise together, forming a group of people that is easy for conmen to recognise and infiltrate."

Many are elderly too, and more vulnerable to sharp practice by fraudsters, who themselves are often based in offshore havens or countries with little or no financial regulation.

Mr Marchant was the first to raise concerns about Imperial Consolidated, a financial group that sold investments promising returns of 15 per cent a year to UK expats across the world. It collapsed in 2002 after losing up to £200m of investors' money and became the subject of a Serious Fraud Office probe.

Paul Austin, a British expat based in Dubai, lost many thousands of pounds in the Imperial fiasco.

Regulation against dubious fund operators is either too weak or non-existent in many countries, he says. "Investors have no easy route to recourse. We need an international fraud squad like Interpol which can enter countries at will and have access to the judiciary of the region or country without hindrance.

"A strong deportation and cross-country information exchange is essential as these [advisers] move from country to country rolling out the same show."

Another concern is that expats like to keep their money offshore to avoid paying UK taxes. However, this can leave their savings much more vulnerable than they would be in well-regulated jurisdictions.

"Where a financial adviser is based in the UK and gives negligent advice in relation to offshore products, there isn't generally a problem," says William Ellerton of solicitors Bevans. This is because, in nearly all cases, the adviser will be insured and regulated by the Financial Services Authority (FSA).

"This means that a disappointed investor will be able to claim compensation."

The same may not be true for expats. "Financial advisers operating abroad are not bound by FSA regulations, which require that they fully understand the investor's risk profile and investment objectives. This lack of regulation can lead to some appalling cases of mis-selling, particularly where advisers are chasing generous commission payments from the funds."

If losses are suffered by investors, their only recourse might be to sue the adviser in the country where the guidance was given, Mr Ellerton adds. "However, where that adviser is unregulated and frequently uninsured, there may be little purpose to this."

The English-language Sur newspaper in Spain reported a recent incident of advisers targeting expats from the Costa del Sol through to Barcelona. Prospective clients were offered a return of up to 16 per cent on their capital.

So far, on the Costa del Sol, 700 families are said to have lost a total of £70m to these fraudsters.

It transpired that the advisers involved were not on the register of the Spanish regulator, the National Investment Market Commission. In the past 12 months, this body has issued 15 warnings about consultants acting without authorisation.

To counter such attacks on their finances, the Costa del Sol Action Group was formed to bring claims to the Spanish courts. In the £70m fraud case above, lawyers acting on behalf of the victims are now pressing criminal charges against the financial intermediaries.

But Gwilym Rhys-Jones, an expat investigating frauds for the action group, warns: "There is no proper system of regulation of financial advisers in Spain."

All experts say that investors should always use independent financial advisers and funds that are reputable and regulated in a country with strong protection for investors.

www.costa-action.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Tax Assistant

    Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

    Recruitment Genius: Outbound Sales Executive - OTE £25,000

    £16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

    £45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

    Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

    £35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Day In a Page

    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
    America: Land of the free, home of the political dynasty

    America: Land of the free, home of the political dynasty

    These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
    A graphic history of US civil rights – in comic book form

    A graphic history of US civil rights – in comic book form

    A veteran of the Fifties campaigns is inspiring a new generation of activists
    Winston Churchill: the enigma of a British hero

    Winston Churchill: the enigma of a British hero

    A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
    Growing mussels: Precious freshwater shellfish are thriving in a unique green project

    Growing mussels

    Precious freshwater shellfish are thriving in a unique green project
    Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

    Diana Krall interview

    The jazz singer on being friends with Elton John, outer space and skiing in Dubai
    Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

    Pinstriped for action

    A glimpse of what the very rich man will be wearing this winter
    Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

    Russell T Davies & Ben Cook: How we met

    'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
    Bill Granger recipes: Our chef serves up his favourite Japanese dishes

    Bill Granger's Japanese recipes

    Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
    Michael Calvin: How we need more Eric Cantonas to knock some sense into us

    Michael Calvin's Last Word

    How we need more Eric Cantonas to knock some sense into us