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For many years I have been advising globally mobile people and their families and there has always been an issue that regularly arises.  Non-UK based Financial advisers selling commission-based investment and pensions products to expats. It is often the case that disclosure rules are not followed and therefore the client is not told how much the advice is truly costing them, the ongoing charges associated with the pension or investment and how long they are tied into the product itself without incurring very large exit penalties.

Some of the pensions and investments sold include something called an Offshore Investment Bond. Providers of these Bonds allow them to be sold to clients with up front commission payments of up to 7% of the investment or pension value. To repay this commission and generate profit, the Bond provider will often charge a percentage based fee, usually 1%, each year. This is on top of all the other costs associated with an investment such as Bond administration charges, the cost of the underlying investment, trading and ongoing advice costs. Should the account be closed within a redemption period, a fee will be deducted from the proceeds to cover any unpaid costs.

Sadly, it is often the case that once the Bond has been created and the money is invested, the adviser will disappear and not provide the ongoing service they initially offered. To compound the issue, the underlying investments themselves may not be appropriate for the client nor may they be safe to use. We have seen many unregulated collective investment schemes fail over the years where the client was not told the risks involved in using them.

So, what can be done?

The first thing to do is to complain to the firm that sold you the investment or pension if you are unhappy with the advice you have been given. If they are unable consider your complaint fairly or you are unhappy with the response, you should investigate what protections you are afforded in the country where you received the advice. You could also investigate who regulates the advising firm and contact them if there are no independent adjudicators (The UK has the Financial Ombudsman Service for example).

In many of the cases I have seen, the client has not been able to find any recourse and they have had to try and make the best out of a bad situation. A service we offer is helping clients understand what they have been sold, the total costs involved of what they have and what they should do with it going forward. As explained, there can be large penalties for withdrawing money so we will consider the cost of leaving the plan compared with switching away. Should it be appropriate to stay within the Bond, we can help you invest the funds into an investment strategy that is properly aligned with your tolerance towards risk, future objectives and overall financial plan. Should you wish to withdraw the funds and would like to reinvest them, we can advise you on an appropriate fee-based investment strategy that does not involve commission or exit penalties.

If something like the above has happened to you, the team at Cross Border Financial Planning would be delighted to speak with you to discuss your options, with an initial consultation being at no cost or obligation.

Philip Teague

Cross Border Financial Planning


Cross Border Financial Planning do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. The value of investments can fall as well as rise. You may not get back what you invest.

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