"FCA financial regulation quite rightly prevents unsophisticated investors from engaging with these high-risk funds"
The claim centres around the alleged misselling of high-risk funds through unregulated collective investment schemes to unsophisticated British and international investors living overseas.
The group's lawyers say that by wrapping these funds in life assurance products and providing them via their offshore Isle of Man subsidiaries, the insurers effectively sidestepped UK regulations intended to only allow professional investors to invest in these funds.
The insurers offered investment 'wrap' products that bore the name of either Old Mutual or Friends Provident, typically describing them as either a “life assurance contract” or “life policy”.
Old Mutual International (now known as Quilter International) and Friends Provident sold over £100m worth of these products via the Isle of Man.
The funds were chosen by the investors’ independent financial advisers via Old Mutual and Friends Provident’s offshore Isle of Man subsidiaries. However the claimants say the funds were invested by Old Mutual and Friends Provident, who put their logos on the documents, processed payments, deducted fees and generated annual statements throughout the process.
The claimants' lawyers say the true level of risk that these investors were exposed to was obscured from both the investors and the IFAs who sold the products.
The claim alleges that Old Mutual and Friends Provident received several warnings prior to the funds collapsing, however Old Mutual and Friends Provident continued to list these high-risk funds and allowed British expats to invest in these funds via their insurance ‘wrapper’. Each of these high-risk funds have now collapsed and are now worthless, meaning that in many cases the claimants have lost their life savings.
The group's lawyers say the products should not have been sold as life insurance/assurance products and that "irrespective of the later collapse of the funds, these products were wholly inappropriate for unsophisticated investors to invest in and should not have been offered to them".
Claims have been filed against Old Mutual and Friends Provident in the Isle of Man courts seeking compensation for the losses suffered by investors as a result of the insurers’ misrepresentations and their failure to conduct due diligence on the funds sold to investors through their insurance vehicle.
Niall Coburn of Coburn Corporate Intelligence, a consultancy firm which specialises in large claims against financial institutions, said: “FCA financial regulation quite rightly prevents unsophisticated investors from engaging with these high-risk funds, and it is a scandal that Quilter International and Friends Provident sought to circumvent this, effectively scamming British pensioners out of their retirement savings. We call on all who were impacted by the collapse of these funds to reach out to us, so we can work to secure compensation for the mis-selling of these products.”
A Quilter spokesperson commented: “We sympathise with these customers, however Quilter International is the provider of the life assurance policy and does not provide advice in respect of any underlying investments, as that is the responsibility of the customer’s investment adviser.
“We are aware that a number of claims have been issued in the Isle of Man court, although they have not been served on us at this stage. We will be robustly defending the claims.”
