To Convoy Financial [Dis]Services: Ms Leung Wants Her Money Back

To Convoy Financial Services: 

My name is Lindell Lucy. Ms Leung Chung Yan has asked me to write on her behalf. A few weeks ago, she showed me the ILAS policy you sold her. Considering her medical and financial circumstances, I was stunned that you had sold her such garbage. I was even more stunned to learn that you aggressively push this crap on all of your clients. All of you people at Convoy should be ashamed of yourselves. You present yourself to the public as helpful advisers, but actually, you are greedy, selfish, swindlers. You eagerly sacrifice your clients’ interests for the sake of maximizing your commissions. I don’t believe in God, but if I did, I’d pray that you all don’t burn in hell.

Ms Leung and I have talked to half a dozen different employees at your company, so I know you are already quite familiar with her story. The only reason I am writing again is because a lady named Diana Chu said you won’t do anything else until Ms Leung gives you a signed written complaint. You have seen multiple written complaints and have heard multiple verbal complaints. I don’t know why those weren’t good enough. But if her signature is really so important, why didn’t you request it more than two weeks ago? Are you stalling, trying to frustrate her and wear her down in hopes that she’ll give up and let you keep her money without a fight? Mark my word, there’s not a chance.

Don’t bother calling Ms Leung again to make an attempt to manipulate her emotions. Her friendship with Ms X’s (the Technical Representative) is nobody’s business but Ms Leung’s and Ms X’s. Ms Leung’s complaint will not be dropped. I’m sure that Ms X is disposable to your company, just another one of your pawns. The focal point of Ms Leung’s resentment is the architects of your evil business model, the ones who are responsible for corrupting young, impressionable, new employees.

First of all, you shouldn’t be selling ILAS to anyone. I spoke with a Hong Kong-based mutual fund professional who told me that ILAS was created a long time ago to allow rich Westerners to avoid paying capital gains taxes in their home countries (by disguising their stock investments as an insurance policy). He said those tax benefits don’t exist for local Chinese, so there’s no good reason for locals to buy ILAS. The few small benefits of an ILAS don’t outweigh its high costs (exit fees, policy fees, management fees, credit risk, etc.). The only reason you people sell this poison is because you have a complete lack of moral integrity and an overdeveloped sense of greed. If the commission is higher, you’ll make every effort to sell it, the client be damned.

When you successfully sell ILAS products to clients, it undoubtedly means that they are financially uninformed and that you made no effort to enlighten them about better alternatives. No rational person who knew their options would choose to buy an ILAS (except if they are foreign tax evaders). You depend on clients’ lack of understanding to make your sales. Ms Leung knew nothing about investment, as she indicated on the Financial Needs Analysis Forms you gave her. It’s the very reason she came to your company for help. Instead of helping her, you took advantage of her naivete, viewing it as an opportunity to get an easy commission.

What makes your abuse of Ms Leung so much more egregious than other cases is your complete neglect to properly evaluate her financial circumstances and needs. You were so eager to sell her an ILAS that you failed to recognize that doing so meant putting her life in danger. As you should know, she came to your company for advice after experiencing serious medical problems. In February 2012, doctors surgically removed some potentially cancerous lumps from her breasts. It was especially frightening because Ms Leung has a family history of breast cancer. Her aunt had been battling breast cancer for about 10 years until she passed away a few months ago. Ms Leung had no health insurance at the time of her surgery, so she had to pay her medical bills with her family’s savings. She was worried about how she would pay her medical bills in the future if she ever got sick again. To deal with this worry, your company sold her two health insurance policies, neither of which covered any medical bills that resulted from the pre-existing conditions in her breasts, which meant that she’d have to pay those bills with her savings. Allegedly, to help her accumulate some savings in case of such an emergency, you sold her Standard Life’s Harvest 101 Investment Plan. Your uninhibited avarice had you so concerned about earning a commission from the ILAS sale that you didn’t consider what would happen to her if she developed medical problems related to her breasts again anytime soon. The answer is that she’d only be able to get a small fraction of her money back because of Harvest 101’s high exit fees. Instead of having more, she’d have less money available to pay for life-saving medical treatment. Harvest 101 compromised her health, but you sold it to her anyway.

You asked that she submit any documentary evidence relevant to the complaint I am writing, but you already have copies of her insurance policies because YOU SOLD THEM TO HER. However, I will attach extra copies to this letter anyway, to prevent you from using it as an excuse to further delay refunding her money.

The blinding effects of your greed don’t stop here through. I am dumbfounded that you people at Convoy, who call yourselves “financial navigators”, do not bother to inquire about a client’s debt before recommending investment products to them. Clearly, it’s a consequence of your overriding desire to sell, and your utter lack of interest in determining what’s good for your client. Not one form that Ms Leung filled out asked if she had any debt. One question asked for her salary and one asked for the value of all her liquid assets. She reported $5,000 HKD in liquid assets. Her salary was reported at $14,000 per month ($168,000 per year), but her salary is $14,000 only if she is not absent or late for work, which she commonly is (typically due to sickness). So her actual salary usually ranges from $12,000-$14,000 per month.

If she had zero debt and no medical problems, then she could have afforded Harvest 101, even though it’s a total ripoff. However, Ms Leung had nearly $40,000 in credit card debt and had serious uninsurable medical problems at the time you sold her Harvest 101. You neglected to uncover her debt problems and you already knew her medical problems, which means you are a terrible financial evaluator and an even worse financial navigator. You failed to give her the financial advice she needed: pay off her credit card debt immediately. What you did instead was sell her Harvest 101, which was like flushing $1,000 per month down the toilet for the next two years, making it even harder for her to dig herself out of her mountain of debt with her small teacher’s salary. I say it was like flushing the money down the toilet because she loses her first two years of investment no matter what happens. In the short-term, she loses it to exit fees. In the long-term, she loses it to management and policy fees. There’s no way she can ever get more than a small fraction of that money back, which is a point no one at Convoy ever explained to her, and a calculation that she was incapable of making by herself due to her lack of financial knowledge.

Ms Leung estimates that she had been carrying at least $30,000 in credit card debt for an entire year before you sold her Harvest 101. The effective interest rate, combined with all her cash advance fees and late fees, likely totaled more than 50% annually. In May 2013, more than one year after you sold her Harvest 101, Ms Leung was still carrying about $41,000 in credit card debt. Her finance charges and other fees for just this one month totaled approximately $2,000 HKD. Multiply this by 12 months, and you can get an estimate of how much she has paid to the credit card companies this past year just to service her debt ($24,000). Her inability to pay down even a small fraction of the principal on her debt was in part a consequence of your convincing her to throw away her money on Harvest 101.

Ms Leung has three credit cards which have been completely maxed out. I am attaching copies of her credit card statements from April 2013. You sold her Harvest 101 in April 2012, more than a year ago. She can’t find all her statements from that period because she thinks she might have thrown some of them in the rubbish. However, she was able to find a Citibank statement from April 2012, a PrimeCredit statement from March 2012, and a DBS statement from May 2012. This should be enough for you to see her approximate financial circumstances in April 2012. If you must have all 3 statements from April 2012, then tell us AS SOON AS POSSIBLE. She can order the April 2012 statements, but they cost $50 each and the credit card companies say they need two weeks to send them to her. I can’t think of any good reason for your demanding them unless you want to use it as an excuse to delay refunding her money for another two weeks. Her medical situation should be grounds enough for you to acknowledge wrongdoing.

One last point I want to make is that your representation of the Harvest 101 Plan to Ms Leung was completely misleading. You presented it as a good deal, which it wasn’t. You made no effort to introduce Ms Leung to alternative investment options, such as no-load mutual funds, or exchange-traded index funds, like the Tracker Fund of Hong Kong. You only showed her what her ILAS investment would be worth in 25 years assuming 11.5% average underlying mutual fund returns ($875,868), but you did not show her what her investment would be worth in 25 years if she had avoided ILAS fees and put her money directly into no-load mutual funds or index funds with 11.5% average returns ($1,572,613, which is 80% more). You were hiding the true cost of the ILAS fees under these assumptions: $696,745. You also didn’t explain to her that the first $24,000 she sent to Standard Life was almost entirely irrecoverable. You did not show her what her account value would be in 25 years if she stopped paying early. You only provided a statement that said: “you may experience a significant loss”. Considering her lack of financial knowledge, there’s no way she could have calculated by herself to determine what “significant loss” might mean. In summary, you recommended a terrible product to Ms Leung, made little effort to explain it, obfuscated the true cost of the fees, and made no effort to introduce her to some better alternatives. You took advantage of her. You were only concerned about maximizing your commissions and cared little for what was in the best interest of Ms Leung.

Don’t make the bullshit excuse that she signed saying she understood what she was buying. Of course she didn’t understand. Even Ms X didn’t understand. Anybody who understood ILAS would not buy it and would not sell it to a friend. In April 2012, Ms Leung did not know the difference between a stock and a bond, let alone an ILAS or a mutual fund. She also indicated on her Financial Needs Analysis form that she would probably invest in a financial product based solely on a brief conversation with a friend, such as Ms X. This is exactly what happened. You trained Ms X to sell this garbage, although you did not help her to fully understand it. Then, your company capitalized on the friendship and trust between Ms X and Ms Leung. I don’t doubt that you hire new salespeople largely to gain access to their friends and family. Those are the easiest people to sell to, and also the people least likely to complain after the fact. If anybody is responsible for the current deterioration of Ms X and Ms Leung’s friendship, it is the evil architects at your company.

To repeat once again: Ms Leung wants back all of her $13,000, and I am prepared to help her fight for it, especially through the media. I will be forwarding this message to all the relevant regulators and to journalists who have expressed interest in reporting on this case.

Please bring this to a conclusion as soon as possible. Ms Leung has signed a copy of this letter to affirm that she has given my permission to write to you on her behalf and to explain her demands and complaints. A copy of that signed letter is attached to this email. Numerous other relevant documents are also attached. I will personally bring physical copies of all these documents to you this afternoon. Ms Leung’s Standard Life Harvest 101 Investment Plan policy number is XXXXXXXX.

Lindell Lucy

Leung Chung Yan

Monday, June 3rd, 2013

Health Insurance Excludes Pre-Existing Conditions

Sun Life Health Insurance Excludes Pre-Existing Condition [Redacted and Resized]

BUPA Health Insurance Excludes Pre-Existing Condition [Redacted and Resized]

Excerpts from Harvest 101 Plan Application

Credit Card Statements

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