Hong Kong, UAE, and Singapore Regulators Allow Insurance Companies and Financial Advisers to Openly Scam Consumers with Impunity

A few days ago, the United Arab Emirates’ national newspaper published a shocking article about local residents falling victim to insurance-linked investment scams. Just like in Hong Kong and Singapore, the UAE’s insurance industry is very poorly unregulated. Fraudsters have been able to operate openly without much worry that they’ll ever be held accountable for their crimes.

According to the article:

The UAE has…put many consumer protection laws in place over recent years, but one area that seems to have fallen through the cracks is investment schemes administered by insurance companies such as Friends Provident, Zurich and Generali. These are then sold – through financial advisory firms – to individuals who often possess little financial know-how and put a lot of trust in what they are being told by advisers.

…Matt Cowan, the regional director for the London-based Chartered Institute for Securities & Investments, a body that awards industry qualifications, says that there is currently no regulatory requirements in the UAE for wealth managers to be professionally qualified. And that opens the door for fly-by-night operators looking a quick buck at the expense of their clients.

…[A victim, Pete Manzi,] says advisers are able to act without fear of being taken to task because there isn’t a regulator that has clearly taken on the role of overseeing these types of investments. Neither has he been able to get any watchdog to address his grievances, he says.

“There is no one to go to,” says Mr Manzi. “I went to the administrator of the fund I was put into and they basically ignored me. They said tough luck. The problem in the UAE is that there isn’t a regulatory body and you can actually become a financial adviser without any qualifications. You can walk off the street and say you want to become one.”

Disturbingly, the same insurance companies who are scamming consumers in Hong Kong and Singapore are also scamming consumers in the UAE. These companies are also using the same products (25-year savings plans) and the same tricks (decades of secretly indemnified commissions, bogus bonus units, deceptive fee structures, and phony account values).

A managing director from Friends Provident was interviewed for the article and defended the practice of tricking consumers into paying decades of undisclosed commissions in advance. He also claimed that most brokerages — who collaborate in the fraud — are “respectable”.

Baloney.

Individuals who make a living out of deceiving others are despicable and deserve to rot in prison.

The governments of Hong Kong, Singapore, and UAE need to wake up and bring these crooks to justice.

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Correction: A reader has pointed out that Japan, China, Thailand, Vietnam, etc. have been left off the list of countries with negligent regulators. Victims from all of these countries have been in contact with the author of this blog. Apologies to them!

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