Adviser AES International claims to have seen a 50 per cent increase in the number of unsophisticated British expat clients holding Ucis products.
David Norton, head of investments for AES International, said that “complicit” in the distribution of these funds were life offices who had earlier pushed such schemes at UK retail investors.
He said that since the FCA issued a ban on the promotion of Ucis funds in the UK in January 2014, those selling such schemes had merely shifted their attention to expatriates and overseas investors.
He added: “Some well-known international life companies are complicit in the distribution of these products as they allow unregulated financial advisers to encourage clients to hold them within the offshore insurance wrappers which they provide.”
When asked, he would not name these companies on the record, but said: “We come across many expatriates with investment portfolios which are nearly entirely allocated to Ucis and other esoteric funds, often with disastrous consequences.”
There are an estimated 100,000 expatriate British pensioners across the world, according to the latest ONS statistics.
Alan Morgan-Moodie, chief executive of the Association of International Life Offices, said: “Our member companies are highly regulated international life assurers.
“I find the comments from the adviser puzzling. I believe our members are aware of the sensitivity of this issue. Should a policyholder wish to invest in such funds, and just because the title says “unregulated” does not necessarily mean “bad”, a member would require direct, explicit instructions to invest.
A spokesman for the FCA said: “Consumers have lost substantial amounts of money investing in Ucis and similar products in recent years so the need to introduce new rules to prevent this from continuing was essential. However, we have also taken into account that for some investors these products can still be appropriate. We believe our rules strike the right balance.”
Alex Reynolds an adviser at London-based IFA Advies Private Clients, said: “AES’s warning does not surprise me. As there is less of a target market in the UK those promoting these schemes are clearly looking elsewhere, particularly territories with little or no regulation.
“The level of regulation is down to each individual territory, as of course is the level of investor compensation. But this does need to be tackled in some way, perhaps by an international task force. But essentially, it is down to investor education to help them see through schemes that may be implausible or plain fraudulent.”