Expats targeted by ‘unlicensed financial rogues’

Authorities advise people to check who they are seeking advice from

British residents in Cyprus are prey to unscrupulous financial advisers peddling high-risk investment that they lack the expertise or license to be offering.

Cyprus’ large expatriate community is continuing to be targeted by several unlicensed and unregulated international financial advisory companies, the CEO of a local wealth management company has warned.

Woodbrook Group Chief Executive Michael Doherty said his main concern was to raise awareness, so people ask the right questions to those offering them something that sounds too good to be true.

He believes more expatriates may unwittingly be risking their savings because they are receiving advice from unregulated consultants.

“People lose pensions because they are fooled by unlicensed practitioners, we want to make sure people are getting proper advice,” Doherty told the Financial Mirror.

He said the issue was one of making people aware and not self-promotion for his company.

“We need check and balances… these guys are misselling because there are no checks on what they are selling.

“We are not saying give business to us, but we are saying clients should know what they can and can’t buy and know what the risks are,” said Doherty.

He said people are “selling what leaving”.

Woodbrook estimates that thousands of expats, mainly British nationals, have been badly burned in the past by unregulated and unlicensed operators who sank their savings and pensions into high-risk investments without their clients’ knowledge. It says several international financial advisory firms on the island are continuing to target expatriates without having a proper license.

“Many of these companies are regulated by the Cyprus Insurance Company Control Service (ICCS) but are offering services that are not covered by their license, including advising on underlying investments on insurance bonds,” said a statement by the group.

Sour Taste

they

like and

then

Doherty urged expatriates to be extra-vigilant and to ask their financial consultants some basic but important questions to ensure they are dealing with a fully regulated and compliant company.

“This happens all over Europe, it’s bad in Cyprus, but not worse than any other country,” said Doherty.

“A majority of expats have a sour taste from people in the past and I know companies that are doing it,” he added.

Woodbrook Group is regulated by the Cyprus Securities and Exchange Commission (CySEC) and by the ICCS. CySEC recently approved the company’s merger with the Felicitas Management Group.

Woodbrook says it safeguards clients’ investments through an “innovative approach” of adopting model portfolios, where the combined expert knowledge of a series of trusted fund managers is harnessed to provide a much greater layer of protection to individual investments.

“You will not see our clients in funds that promise ridiculously high returns. When it comes to financial planning it is all about a solid return and managed risk, but more important is managing the downturn. We are living in volatile times, so prudent and trusted management is vital,” said Doherty.

Woodbrook has three offices on the island, employing 70 staff, with its HQ in Limassol.

“There is no such thing as a bad product, but it is when sold to the wrong people just to get a commission,” said Doherty.

CySEC urges checks

So far this year, CySEC has received 172 complaints by investors against companies potentially offering unauthorised investment services.

The provision of investment services is legal, only if conducted by companies that have been authorised by CySEC or the competent authority of an EU Member State for the provision of those services.

“Therefore, any entities that

appear

to

provide

such services without authorisation, are in violation of the legislation and are subject to criminal and administrative sanctions,” CySEC told the Financial Mirror.

To enable investors, CySEC maintains a public register, available on its website, of authorised CIFs and IFs from other EU Member States for which a notification has been submitted to CySEC.

It has established an electronic system for the submission of complaints against authorised CIFs and non-regulated entities, in order to help investors to do so.

Any claim for compensation against a non-licensed entity providing investment services without due authorisation can only be addressed by the courts.

Paphos Q&A

Woodbrook hosted an open Q&A session for existing and new clients in Paphos on Wednesday, it was the first client forum in the area since the company’s recent merger with Felicitas . Many of the 60-odd who attended the event in the Elysium Hotel were Felicitas clients.

Doherty said most of those who attended had negative experience through dealings with unregulated companies in the past. Many lost a lot of money in the crisis involving unlicensed operators back in 2011 and 2012.

A few former Felicitas clients who attended said they had thought of moving their investments in the wake of the merger, but indicated they were happy to stay with Woodbrook after the presentation.

Woodbrook now plans to host similar seminars on the island over the coming months. One is currently being planned for Limassol, but the date has not yet been finalised.