ILAS Victim DeAnn Tsang Requests $93,000 Refund

To Convoy, Zurich International, Hong Kong Regulators, and the Media:

I am writing on behalf of my and Chung Yan’s friend, Tsang Sau Ming (DeAnn). Convoy is responsible for mis-selling her a Zurich Vista ILAS policy. She is requesting—and she deserves—a full $93,000 HKD refund.

In October 2010, DeAnn was 24 years old and had a monthly income of just $10,500 HKD. She earned $9,000 from her full-time job as a project engineer, and the other $1,500 came from part-time tutoring. Because she was earning so little money, she was eager to find sources of additional wealth. 

DeAnn had heard of mutual funds, and although she didn’t understand how they worked, she knew they could make her savings grow. She was interested in investing in one, but because she didn’t know how to do it, she sought the advice of a trusted friend who did. The friend she contacted worked at Convoy. He said he could help. They arranged a meeting at a restaurant where he introduced her to a combination of funds and explained why he thought they were good. He offhandedly remarked that the funds came with a “free” life insurance policy, but he never pointed out that the funds themselves would be embedded within an insurance contract, nor did he explain the implications of this fact.

This was DeAnn’s first introduction to investing. Unfortunately, it was a biased, incomplete, and self-serving introduction. DeAnn’s friend was showing her an investment-linked assurance scheme, something she’d never heard of and something which was unsuitable for her, but he was presenting it as if it were the same thing as a pure mutual fund investment, which is what DeAnn actually wanted and needed. 

He never explained that investing in funds indirectly through ILAS was significantly different from investing in funds directly. DeAnn didn’t even know that she had a choice. She was given the impression that there was only one way to invest, and it was the way her friend was explaining. As far as she knew, initial contribution periods, 25-year contracts, surrender penalties, extra layers of ongoing fees—these were all fundamental characteristics of investing in mutual funds.

After reviewing DeAnn’s budget, her friend recommended that she contribute $3,000 per month to an ILAS policy, which was 28.6% of her small income. Conveniently (for him), this percentage was just below the 30% threshold which would have triggered a review of her application by colleagues at Convoy. He asked if she were able to bear such a relatively high amount of contribution, since it would only leave her with about $1,000 HKD per month as a “buffer” to meet unexpected needs. Because she was young, determined, and naively optimistic, DeAnn said she thought it would be ok. Her friend then recommended that she sign the longest possible contract because it would allow her to “gain more”. He didn’t mention that the longer contract paid him a higher commission. 

Trusting that her friend was giving her good guidance, DeAnn made the first investment decision of her life, one which she would be locked into for decades. She agreed to invest in the funds that he recommended, through the policy that he recommended (Zurich Vista), on a 25-year contract, with an initial contribution period of 18 months, at $3,000 per month. 

DeAnn now had to sign a number of documents. To make it quick and easy for her, her friend sat with her and guided her through the paperwork. He penciled in the answers to her financial needs analysis and risk profile questionnaire. She gave her assent to each answer, but his guidance undoubtedly influenced the results. As can been seen on the forms, he crossed out and changed two answers. The first change increased her average monthly income for the previous two years, and the second change increased the percent of her income that she was able to contribute to the policy. After filling out the answers, he showed her where to sign. 

Although DeAnn didn’t know it, this process was completely backwards. Rather than ask her to fill out the forms independently, and then use her answers as a basis for his recommendation, he helped her to write in answers that matched his recommendation. He clearly had no intention of seriously considering whether or not ILAS and his choice of underlying mutual funds were right for her. It seems that in his mind, they were right for everyone.

After signing, DeAnn would pay $54,000 over the ensuing 18-month initial contribution period, which was an amount multiple times higher than her entire life savings. Unknown to her, most of this money would be forever irrecoverable, partly because a large portion of it would be paid to Convoy as commission (or bribe money, according to Jeremy Hobbins). To use the language of the policy documentation, the money would either be lost in the short-term to a surrender penalty or lost in the long-term to fees. Although DeAnn was given the impression that she was accumulating an extra $54,000 in savings over the first 18 months of her policy, she was really just transferring her monthly contributions to the bank accounts of people at Convoy and Zurich. 

If DeAnn were like Convoy CEO Rosetta Fong, with an income of $2,850,000 per year and more than $100,000,000 in company stock, then sure, DeAnn could afford to throw away 28.6% of her salary for 18 months. But DeAnn isn’t like Rosetta Fong. She barely earns enough to live on in Hong Kong. In the event of an unexpected emergency, such as a sickness, an accident, a job loss, or a loved one in need, she’d likely need access to her modest savings. But she is unable to do that if her savings are in other people’s bank accounts (including the bank account of Rosetta Fong, who’d probably find it insufferable to live with a mere $1,000 HKD “buffer”.)

If DeAnn’s friend had not been compromised by a conflict of interests, if he had received proper training at Convoy, then he should have advised DeAnn to stay away from ILAS and put her money in a liquid investment, such as an exchange-traded index fund, so that she could quickly access her money in a time of need. The fact that he advised her to “lock up” so much of her money for 25 years was incredibly risky and imprudent. Moreover, if he were really looking out for her interests instead of his own, he’d have suggested to her that she could maximize her long-term gains by minimizing the fees she paid. Recommending that she invest through a fee-heavy, 25-year ILAS plan was like telling her to shoot herself in the foot before running a marathon. It was self-defeating and made no sense.

For more than two and a half years, DeAnn paid into the Zurich Vista plan without understanding what was really happening to her money. Then, about two months ago, in the wake of my public battle with Convoy and Standard Life, DeAnn had an enlightening conversation with Chung Yan, and later with me. This inspired her to do some research on her own. DeAnn was surprised to discover that: 1) She owned an insurance policy, not a pure mutual fund investment. 2) She didn’t own stakes in the funds that she thought she did. Zurich owned them. 3) Consequently, she was at risk of losing everything if Zurich ever became insolvent. 4) She unknowingly paid a massive commission to Convoy and her friend, which was taken out of her initial contributions. 5) The ongoing management fees and policy fees that she paid to Zurich were entirely unnecessary because she didn’t need to go through an insurance company, through an ILAS product, to invest her money. Directly investing in mutual funds was a choice that her friend had neglected to mention, perhaps out of self-interest. DeAnn was shocked and upset, to say the least. She was even angry at me for suggesting that her friend might have taken advantage of her.

DeAnn confronted her friend and demanded an explanation. He defended himself by maintaining that ILAS was a good product and that he gave her sound advice. From his point of view, the amount of commission he received didn’t influence his recommendation, and he believed he was looking out for her best interests (not his own). However, he acknowledged that he didn’t introduce her to other options, like investing directly in mutual funds, nor did he explain how ILAS was fundamentally different. He admitted that he should have done this and apologized for his absent-mindedness. 

He seemed to be convinced of his own purity, but from an outsider’s perspective, he unquestionably gave her biased and awful advice motivated by a conflict of interests. There’s no other rational way to interpret the fact that he introduced her only to the product which paid him the highest commission (via hidden high costs inflicted upon her) while it was obviously inappropriate for her financial situation. 

Since November 2010, DeAnn contributed $93,000 to her Vista policy. Currently, the (phony) account value is about $93,500. Subtracting her (phony) $9,000 “bonus” allocation leaves $84,500, which is a more accurate reflection of the sorry performance of the underlying funds. After fees, they gave her a loss of $8,500. But even this number doesn’t cut through all the phoniness. The (real) surrender value of her account is currently about $43,000, a loss of $50,000. This is a pitiful 3-year return, a loss of more than 50%, even worse than what most people experienced in the financial crisis of 2008, and it occurred while stock markets around the globe have been hitting new highs. 

DeAnn now realizes that her friend wrongly sold her a bad product that was unsuitable for her situation (and arguably almost everyone’s), and she wants her money back as soon as possible. She asked her friend to help her get a full refund, but he said it was impossible. They attempted to negotiate a private solution, but they couldn’t reach an agreement. He offered to buy her policy at a price of no more than $68,000 (perhaps with an intent to flip it to another client), but DeAnn would take nothing less than $79,000. According to her friend, because he was an employee, he could buy an ILAS policy at a steep discount, which consisted of a shorter initial contribution period. He calculated that it made no economic sense for him to buy her client-priced policy for more than $68,000. I assume it never crossed his mind to factor in a reimbursement of the $13,500 in commission he says he received out of her contributions. His whole line of reasoning was another demonstration of how he consistently prioritized his interests before hers.

Because they couldn’t reach an agreement, and because DeAnn recognizes that her situation is representative of a larger social problem, she has decided to take her complaint to regulators and the media. She is also reverting to her original demand for a full $93,000 refund.

Up till now, DeAnn has been hesitant to complain because she doesn’t want to cause her friend too much trouble. She is requesting that I keep his name anonymous and that the media do so as well. Perhaps you are wondering why she is being so generous. It’s because, like Chung Yan, she believes her friend didn’t understand that ILAS was bad for her. In fact, she even thinks that he was brainwashed by the culture, training, and financial incentives at Convoy. I think she’s probably right. After examining Convoy’s business model, I believe it’s fair to say that Convoy resembles a large cult whose members are all suffering from the same delusion. 

Because Convoy’s revenue comes mostly from ILAS, it would be virtually impossible for anyone to work there and criticize its social value. Over the last 6 years, from 2007 to 2012, Convoy has earned 99.7%, 99.8%, 99.1%97.0%, 97.9%and 89.9% of its revenue from ILAS. If an employee began to doubt the veracity of Convoy’s ILAS gospel, he or she would probably quit or be fired. I suspect this to be a common occurrence, judging by the high turnover rate for junior members and trainees: 33.1% (2004), 41.6% (2005), 35.3% (2006), 37.7% (2007), 40.2% (2008), 52.9% (2009). [Another reason for the high turnover rate might be that new employees quit after selling ILAS to all their friends and family, finding it too difficult to sell to strangers. This proposition is supported by the fact that, as of 2010, more than 80% of Convoy’s sales were a result of referrals and recurring business, while less than 20% resulted from direct marketing.]

Convoy admits that they mostly recruit young people with little industry experience. Conveniently, such people are highly impressionable and easier to indoctrinate. If the recruits can’t be trained to conform, then Convoy can dispose of them. I interpret the high employee turnover rate as a kind of cultural purification process. Only true believers, cynical fakers, or mindless imitators are allowed to stay within the “corporate cult”. Convoy’s belief system is reinforced with large financial rewards and severe financial punishment. Employees are paid a high commission when they sell ILAS, and they get paid nothing if they don’t. Convoy also uses a controversial business strategy known as MLM (multi-level marketing), which has been criticized as being similar to cult formation. In Chinese, MLM is called: 多層次傳銷. In this system, senior members get to keep a portion of the earnings of all the new members they recruit. In order to maximize their earnings, seniors might, for example, try to delude themselves, their recruits, their clients, and everyone around them into believing the lie that ILAS is the cure for nearly all investment needs. They might attempt to enforce the delusion by praising sycophants and harshly criticizing heretics. As junior members see the large financial rewards reaped by their leaders, some will acquire grandiose visions of rising through the hierarchy and skimming the commissions of hundreds of junior members. One ambitious young Convoy employee admitted in an interview with Classified Post that his goals were to train up one thousand junior members. These sorts of fantasies motivate the newcomers to imitate the leaders. The result is a corporate culture (or cult) in which everyone indulges in the profitable delusion that ILAS is a wonderful product that everyone should invest in.

It would not surprise me if those at the highest levels of management at Convoy are also the ones who are most brainwashed. CEO Rosetta Fong has publicly exhibited her own susceptibility to pseudo-intellectual cult figures. In an interview with ATV, Ms. Fong talked about how she was influenced by a self-delusion instruction manual titled The Secret. This book suggests that one’s thoughts and wishes can supernaturally transform reality. Unfortunately, despite whatever fantasies are in Rosetta Fong’s head, ILAS hasn’t transformed. It remains exactly what it is—a ripoff.

The fact that Convoy has historically earned almost all of its revenue from ILAS is not a consequence of ILAS being popular with consumers. It’s a result of Convoy making little effort to sell anything else. No other products are nearly as profitable, so Convoy has avoided educating clients about the benefits of alternative options, especially when doing so would have cut into their ILAS sales. The sale of Vista to DeAnn Tsang is a prime example.

Despite appearing brainwashed, Convoy’s management clearly retains some contact with reality. Last year they began efforts to diversify their sources of revenue (10.1% coming from non-ILAS products). This year they’ve resorted to money-lending andinvesting in IPOs and are currently in the process of acquiring Convoy Asset Management, which deals in non-insurance investment products. They’ve also engaged in a round of major fundraising by issuing new shares. They announced a second major round just two days ago. I suspect these moves are a desperate attempt to offset the decline in ILAS revenue that they knowwill likely occur as a result of the new commission disclosure rules. Once clients are aware of how much they have to pay for Convoy’s “free” advice, more of them will realize that ILAS is a bad deal and will avoid it altogether, which will Convoy at risk of collapse. If the management were truly naive and innocent (unaware that ILAS is a rotten product for most investors), then they wouldn’t be so eager to cover their backsides with this flurry of new initiatives.

As I mentioned before, DeAnn thinks her friend was brainwashed by Convoy. She thinks he honestly believed that he was giving her good advice, and she thinks his belief was a product of the indoctrination he received at Convoy. Consequently, even though her friend made a mistake, she believes Convoy’s management holds more responsibility for his mistake than he does. I agree with her.

I want to illustrate with an analogy. Think of Osama Bin Laden, the leader of al-Qaeda, a religious cult and terrorist organization. Like all religious maniacs, Bin Laden was deluded, and he induced delusion in his followers. He convinced everyone, including himself, that they were carrying out the work of God. On September 11, 2001, Bin Laden’s followers, obeying his orders, crashed two planes into the World Trade Center. Despite the fact that Bin Laden was not present at the scene of the atrocity, due to his organizational role, he was identified as the primary source of evil, which is why the US hunted him for nearly ten years, put a bullet in his head, and fed him to the fish.

Similarly, the management at Convoy may believe they are doing God’s work, but they are really just orchestrating financial destruction. And even though they are not physically present when their small army of 1700 deluded consultants plunder the savings of inexperience investors, the management is unquestionably responsible. They train, indoctrinate, and continually supervise the activities of their employees. They also reap the largest financial rewards. CEO Rosetta Fong and Chairman Quincy Wong both have 7 figure salaries and over $100 million in company stock. If they’re going to take the fruits of their employees’ labor, then they also need to take the responsibility that goes with it.

Convoy will undoubtedly try to defend the sale of ILAS to DeAnn Tsang, but it is impossible. I’ll address some of their probable excuses:

1) DeAnn’s Vista policy came with a $400,000 Life Insurance Policy.

DeAnn did not want a life insurance policy, and she did not ask for one. Plus, she already had multiple life insurance policies, and her friend knew it. If she really wanted extra life insurance, she could have bought it cheaper than what she paid for Zurich Vista. 

Her friend also failed to clearly explain the conditions of this “free” life insurance. His representation was misleading, most likely because he didn’t understand the confusing language in the documents. DeAnn’s impression was that, if she died, her mother would get the account value plus the death benefit. But this is inaccurate. Her mother will only get one or the other, whichever is higher. This means that the more Deann pays, the more the death benefit shrinks in value. Once her account value grows above $400,000, the death benefit ceases to exist. This should happen just after the 8th year, assuming a 7% annual return.  

There was another important point concerning the insurance that her friend failed to notice or address. DeAnn participates in dangerous sports, but if she dies while doing it, her mother will not receive Vista’s death benefit because the policy doesn’t cover this type of death. This is additional proof that the insurance wasn’t very useful to her, but it’s ultimately irrelevant, as DeAnn wasn’t interested in buying any kind of insurance. She wanted capital gains.

2) Vista has free fund switching. 

DeAnn told her friend that she intended to be a stable investor and had no desire to actively switch funds. The free fund switching was of little value to her. She didn’t need or request for it.

Anyway, one doesn’t need an ILAS policy to get free fund switching. One can get the same effect by simply avoiding funds with load fees. 

Moreover, inexperienced investors shouldn’t be encouraged to actively switch funds. Such people typically panic when they see their assets dropping in value and sell at the worst possible time. They also tend to buy at the worst possible time, when the price of an asset is peaking. In short, they buy high and sell low. History has proven this over and over again. Inexperienced investors should be advised to buy and hold, not actively buy and sell.

Even professionals aren’t very good at timing the market, which is why, over the long-term, as several historical analyses have shown, almost all actively managed mutual funds underperform the market average after accounting for fees. Trying to pick the best fund managers is like trying to win the lottery. The majority of people would be better off if they didn’t try. Consequently, the most prudent course of action is to satisfy one’s self with a guaranteed average return, which can be accomplished by buying andholding a low-cost index fund. Over the long run, one maximizes returns by minimizing fees. Because ILAS is just an unnecessary layer of high fees, it should be avoided. If an investor truly has a 25-year time horizon, then a low-cost index fund is the best way to go, and a high-cost ILAS policy is the worst way to go. For those who are uninformed, try Googling “index vs mutual fund investing“.

3) Zurich Vista is a good long-term investment.

Compared to everything else, it is not. The first $54,000 that Dean contributed went straight down the toilet. The rest of her contributions were subject to management fees, policy fees, currency conversion fees, mirror fund fees, and probably other hidden fees that I wasn’t able to find in the fine print. The long-term damage of all these fees, due to compounding effects, is enormous. The damage can be quickly calculated with reference to the illustration document, using a compound interest calculator

Strangely, Convoy did not give DeAnn a proper illustration document. They created unnecessary confusion by giving her one that shows her estimated account value in 25 years assuming monthly contributions of $2,000, not the $3,000 she was actually contributing. Consequently, for simplification, I’ll have to make my point using the $2,000 assumption.. 

The Vista illustration document shows that in 25 years, if the underlying funds perform at 11% annually (an unrealistically high and purposely misleading assumption), DeAnn’s account value will be $1,736,330. But if she avoids ILAS fees by investing directly in some no-load funds, and they perform at 11% annually, in 25 years her investment will be worth $2,906,922 (67.4% more). Thus, Vista’s fees result in an unnecessary loss of $1,170,592. No rational person would voluntarily sacrifice this much money. Vista is clearly a bad deal, and the management at Convoy doesn’t know how to do math. 

I’m not going to say anything more on this issue because it should already be clear that DeAnn shouldn’t have been sold an ILAS product. What I want to do now is make the case that Hong Kong’s regulators are partly to blame, not just for DeAnn’s problem, but for all ILAS mis-selling cases. The following self-contradictory bundle of lies and stupidity come from Convoy’s 2010 listing document:

“Pursuant to the SFC Circular, units in ILAS are not securities; any advice that might be given to a policyholder concerning the selection of underlying funds of ILAS is not advice on securities; and promoting, offering or selling ILAS does not constitute dealing in securities. Therefore, our Directors consider that our Group does not market any securities to our customers.” 

“the SFC considers that insurance intermediaries who are promoting, offering or selling ILAS to the public (including giving advice to policyholders concerning their selection of the underlying funds) are neither obliged nor permitted to be licensed under the SFO. As a result, an insurance broker may arrange with his/her customers to purchase authorised ILAS without the need for registration as an investment adviser or an investment representative under the SFO.” 

With all due respect, the SFC needs to pull its head out of its ass. Does putting an insurance wrapper around securities magically transform them into something other than securities? Is it OK for people like Cat Lau, who know almost nothing about investing, to sell a rotten 25-year investment product to people like Leung Chung Yan, who also knows nothing about investing? How can anyone expect Cat Lau to understand that ILAS is a poor choice for Chung Yan when Cat herself has little understanding of stocks and mutual funds? This is like letting children play with a loaded gun. Once the trigger is pulled, the victim’s savings will be shot for decades. Frankly, people like Cat Lau are unqualified to sell ILAS, and it is the regulators’ fault that they licensed her to do it. SFC and OCI should be deeply ashamed of this scandalous regulatory negligence, and the public should be outraged. The insurance industry has been brazenly exploiting inexperienced young trainees like Cat Lau to gain access to the bank accounts of their even less experienced family and friends. This is disgusting beyond words. On behalf of everyone in Hong Kong, I demand to know whether or not SFC and OCI purposely designed this regulatory loophole to be obscenely profitable to the despicable insurance industry. Please direct your answer to the media.

If one looks at the biographies of the Chairman and CEO of Convoy (Quincy Wong and Rosetta Fong), it appears that they don’t possess any widely recognized advising credentials either, such as CFP. According to Ms. Fong, “When I started, the only training was to sit down and make cold calls to get appointments.” It’s a legitimate question to ask whether or not these two individuals are qualified to be leading the largest IFA company in the region. I would argue that Convoy has become so big, not in spite of their lack of credentials, but because of them. An ethical, intelligent, properly credentialed, and properly educated adviser wouldn’t be recommending ILAS to his or her clients. Only people like Rosetta Fong and Quincy Wong would try to build an empire out of it.

Echoing my previous emails, I want to reiterate the urgency for banning ILAS. It is an entirely superfluous product. The public doesn’t need it and would be better off without it. It has been used primarily as a sneaky tactic to trick investors into paying large and unnecessary fees for services they don’t need. If Hong Kong investors want life insurance, they can buy life insurance. If they want health insurance, they can buy health insurance. If they want investment insurance, they can buy a put option. Why does anyone need ILAS? They don’t. Regulators have no ethical excuse for delaying a decision to ban it.

The same is true for banning commissions. Even Convoy has implicitly admitted this. To quote again from their 2010 listing document: “there may be inherent conflict of interests as the Consultants may be tempted to sell products with higher commission rather than those actually required by or suitable to the policyholders and/or potential policyholders in the event those products required by the policyholders are of lower commission rate. We cannot assure you that, under our current business model, the Consultants will always promote those products that are actually required by or suitable to the policyholders and/or potential policyholders, or at all.” I underlined the last part. The largest IFA company in Hong Kong admits that its consultants cannot be counted on at all to give objective advice as long as they are paid with commissions. This itself is enough evidence to justify a banning of commissions in Hong Kong, just as has been done in the UK and Australia.

The Hong Kong education system needs to step up and do its part as well. Currently, the system is pumping out hoards of financial idiots, easy prey for a predatory financial industry that thrives on ignorance. People like Chung Yan and Deann couldn’t have been exploited so easily if they’d received a decent public education. There’s no excuse for letting students enter the workforce completely unprepared to manage their finances. I’d argue that no teenager should be granted a diploma without first having demonstrated a solid understanding of the principles of investing. I also think there’s a strong case for requiring all citizens to obtain an investment license before allowing them to invest in anything other than index funds, especially with their MPF money. This would be little different than requiring people to pass a driver’s license exam before allowing them to drive, and it’s no different than seat belt laws which serve to prevent people from causing themselves unnecessary injury. Bad investment decisions are probably the source of far more economic damage than car crashes, so it’s time that legislators and regulators start treating this issue accordingly.

Since I started my blog, several people have contacted me, notably from Singapore, supporting my crusade against ILAS. They hope this cause will get as much media attention as possible so that regulators will be shamed into action. Not just Hong Kong regulators. Due to a plethora of different names (such as offshore pensions, offshore bonds, variable annuities), many don’t realize that ILAS is an international problem. To get a sense of how pervasive it is, read these comments. You’ll see the heart-wrenching stories of dozens of ILAS victims from around the world. Just like DeAnn, many were mis-sold a Zurich Vista policy. It’s been suggested to me that the Hong Kong media has more freedom of speech than the media in Singapore, and consequently, an effective way to get regulators to act in Singapore might be to maximize media exposure over here. Hong Kong journalists should bear in mind that their reporting could have a positive effect not just on Hong Kong citizens, but on citizens in Singapore and other countries as well. Sadly, I’ve heard stories about financial companies bullying news organizations, threatening to cut off advertising spending if editors publish stories on their industry’s wrongdoings. If such behavior occurs again regarding ILAS, I hope leaders in the media will face their conscience, take the financial blow, and expose this shameful corruption rather than be a part of it.

Before I conclude, DeAnn asked me to mention that this whole experience has left her traumatized and afraid to trust any adviser with her money. She thinks it will be at least a year before she even contemplates investing again. I hope Convoy is deeply ashamed of what they’ve done, not just to DeAnn, but to the broader Hong Kong public. Right now, the only thing saving them from a deluge of angry clients is wide-spread ignorance. This state of affairs won’t last for long. 

I wasn’t planning to disclose the details of Convoy’s settlement offer to Chung Yan because I wanted the management to do it themselves. They’ve had two weeks to respond to my last letter, which is more than enough time, but they haven’t shown the courtesy to offer even a single word in reply. Consequently, I’ve decided to stop waiting on them. Attached to this email is the settlement offer that Chung Yan and I received from their lawyers. I am releasing it because I hope journalists will inform the public of its contents. All ILAS victims need to know that they can get their money back if they are willing to fight for it. Even those who don’t succeed can at least take pleasure in knowing that the guilty parties will have to pay via legal fees, regulatory compliance,and reputational damage. My advice to victims is to get angry, join together, and don’t back down. 

I want to remind Convoy that I am still waiting for their apology, and Chung Yan is still waiting for the 100% refund that they’ve already offered. I expect nothing less for DeAnn Tsang.

I plan to help more ILAS victims publicize their cases in the near future, with the goal of increasing public awareness of how pervasive this problem is. I suspect that the majority of all past and present ILAS policyholders were given an incomplete and misleading explanation of the products they were sold. As knowledge about this decades-long scandal spreads, the number of complaints filed should rise exponentially. Regulators would be smart to begin preparing for the flood. When they do, I hope they will stand up for the victims rather than cave in to the ill-gotten money and power of the insurance industry.

DeAnn signed a statement granting me permission to help explain her situation and file a complaint against Convoy. A photo of it is attached to this email. To subsequent emails, I’ve attached several of DeAnn’s Zurich Vista documents (policy number 8196800). Journalists are welcome to contact me by replying to this email, and you can contact DeAnn at

I look forward to seeing an ethical response from everyone.

Lindell Lucy

Deann's Signed Statement

Convoy's Settlement Offer to Chung Yan [Redacted]

Notice in the Financial Need Analysis Form below that her friend changed two of the answers. He increased her average monthly income for the past two years and also the percent of income she was able to contribute to the policy. He also falsely wrote that she had $50,000 in liquid assets. He reasoned that this was not an important number, so it was ok to fabricate it. DeAnn estimates that she actually only had about $10,000 to $15,000 in her bank account.

Financial Needs Analysis (3) [Resized]

On the below form, Zurich says they will take no responsibility for the advice given by DeAnn’s friend, despite the fact that they paid him and Convoy a massive commission to do it. I agree with Jeremy Hobbins that the commission paid (on all ILAS products) is excessive and should be regarded as bribe money, meaning Zurich should be held accountable for creating the incentives which led DeAnn’s friend to sell her their awful product.

Zurich Does Not Take Responsibilty for the Recommendations of Advisers [Redacted and Resized]

Excerpts from DeAnn’s Zurich Vista Application

Excerpts of Phone Chat Between DeAnn and Her Friend

Excerpts of Facebook Chat Between DeAnn and Lindell

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