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

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

    SThree: Talent Acquisition Consultant

    £22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

    Recruitment Genius: Experienced Financial Advisers and Paraplanners

    Negotiable: Recruitment Genius: This extremely successful and well-established...

    Guru Careers: FX Trader / Risk Manager

    Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

    Guru Careers: Investment Writer / Stock Picker

    Competitive (Freelance) : Guru Careers: An Investment Writer / Stock Picker is...

    Day In a Page

    How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

    How to stop an asteroid hitting Earth

    Would people cooperate to face a global peril?
    Just one day to find €1.6bn: Greece edges nearer euro exit

    One day to find €1.6bn

    Greece is edging inexorably towards an exit from the euro
    New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

    'Iron Man' augmented reality technology could become reality

    Holographic projections would provide extra information on objects in a person's visual field in real time
    Sugary drinks 'are killing 184,000 adults around the world every year'

    Sugary drinks are killing 184,000 adults around the world every year

    The drinks that should be eliminated from people's diets
    Pride of Place: Historians map out untold LGBT histories of locations throughout UK

    Historians map out untold LGBT histories

    Public are being asked to help improve the map
    Lionel, Patti, Burt and The Who rock Glasto

    Lionel, Patti, Burt and The Who rock Glasto

    This was the year of 24-carat Golden Oldies
    Paris Fashion Week

    Paris Fashion Week

    Thom Browne's scarecrows offer a rare beacon in commercial offerings
    A year of the caliphate:

    Isis, a year of the caliphate

    Who can defeat the so-called 'Islamic State' – and how?
    Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

    Marks and Spencer

    Can a new team of designers put the spark back into the high-street brand?
    'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

    'We haven't invaded France'

    Italy's Prime Minister 'reclaims' Europe's highest peak
    Isis in Kobani: Why we ignore the worst of the massacres

    Why do we ignore the worst of the massacres?

    The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
    7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

    Remembering 7/7 ten years on

    Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
    Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

    They’re here to help

    We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
    Time to lay these myths about the Deep South to rest

    Time to lay these myths about the Deep South to rest

    'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
    What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

    What exactly does 'one' mean?

    Court of Appeal passes judgement on thorny mathematical issue