From time to time financial advisers go bust. Failure is a fact of life in business. Unfortunately, it can leave a trail of destruction in its wake. High profile companies such as BHS caused stress and heart-break for employees and retirees alike as their jobs, pension funds and benefits were suddenly at risk. Thankfully, as BHS were such a well-known high street name, massive efforts have been made to recover some of the pension money. Although employees probably won’t receive as good a pension as expected, they won’t be left completely out of pocket.
Smaller companies also fail, but we don’t hear much about them in the national press. One such situation is emerging in the financial services world where a small company has closed the doors leaving their employees jobless and clients concerned about their portfolios. The suspected reasons behind closure are the disastrous effects of poorly chosen funds by the company on behalf of its clients, as well as questionable pension loop-holes they had previously promoted. The funds were either closed, suspended or cut to a fraction of both the invested amount and expected future value. Either way, they become effectively worthless.
I have written about how to avoid being in this situation in the first place many times. However, in this case the horse has already bolted. Now we have to have a look at what, if anything, can be done to compensate victims.
It’s easy to say, but the first thing to do is try not to panic. You are not alone and help does exist. Before we all used the internet, finding other people in the same position would have been very difficult, especially in a global context. Now, spending a little time searching the web will usually point you in the direction of action groups and lobbyists. Join them, but don’t be persuaded to pay to register as you might just be wasting more money. Having said that, there may be a point where funds are required, for example, to hire legal help. Don’t dismiss this out of hand; be absolutely certain that the group you join is genuine and costs are necessary. Take your time.
Search for companies who specialise in compensating victims
Again, be very careful. Thankfully, there are genuine people and companies who have years of experience in these matters and who have a record of successfully retrieving at least some lost investment money. You may be asked for an initial fee as these companies are not charities; some also work on a no-win no-fee basis. They would seek to take their fee as a percentage of monies recovered. You have to decide which way suits you best.
Speak to the regulators
Although some of the less scrupulous companies who cause these problems are not regulated, the majority are somewhere. If not, they wouldn’t be able to trade. Contact the regulator and find out what, if anything they can do. Unfortunately, in the international financial services world, it can sometimes be difficult to enlist the help of an appropriate regulator, as in many cases, they either don’t understand the issues or don’t see it as their responsibility to prosecute the company or individuals. Give it a try though as no advisory company would welcome a letter from the regulator.
Another regulatory route is to check with the product provider’s regulator. A lot, if not all, funds which close, are suspended or are downright fraud are Unregulated Collective Investment Schemes (UCIS). The clue is, of course, in the first word so no regulator exists to complain to. Most funds are, however, placed inside an insurance wrapper or platform (nothing wrong in principle with either) and they will be regulated.
Consult other financial advisers
Lastly, although you might never want to use the services of financial advisers ever again, there are good ones too. Ask friends, relatives and colleagues about who they use and whether they would recommend their services. Although a lot of international financial advisers have been involved in similar toxic investments, there are also some who as a matter of company policy never recommend UCIS funds. That would be a good first sign and reputable advisers would always be happy to connect you with existing clients who can vouch for them. The advantage in using a reputable adviser is that you have someone helping you who understands in details the issues surrounding offshore pensions. No adviser can promise to get your money back, but a professional one can help you contextualise your situation and gradually improve things over time.
- Try not to panic
- Dig out all correspondence
- Search for action groups
- Speak to recovery companies
- Contact all appropriate regulators
- Find a reputable financial adviser