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Investors hit out at risk warning on IoM fund

A group of investors has accused the Isle of Man government of failing to protect consumers after a geared traded endowment policy provider marketing a fund as “low risk” lost over a third of their savings.

The Premier Shareholders Group has written to the IoM government voicing concerns about risk warnings provided by The Premier Group IoM and its Premier low-risk fund.

Original product literature describes the fund as “relatively low risk”.

It says it is suitable for “experienced international investors seeking potential returns in excess of bank and building society deposits”. The fund, launched in 2001, reached over £100m but now stands at around £40m. Premier closed the fund to new investment in 2005.

Spanish-based action group member Nic Rogers and his wife invested over £60,000 and exi-ted the fund two years ago with £46,000. He says Premier enf-orced a redemption penalty of between 15 per cent and 30 per cent despite prominently citing a “minor exit charge”. Premier argues that the scheme particulars outline its right to apply a market value adjustment.

Managing director Michael Richardson says: “The time the fund was launched and traded, endowments were low risk. I fully accept that the des-cription is no longer applicable. I am aware that some people have put 100 per cent into one asset and of a misleading ad, which is wrong.

We stopped trading with a Spanish-based introducer responsible for this as soon as we found out.”

Isle of Man Financial Supervision Commission chief executive John Aspden says: “Investors signed the undertaking stating that they understood the risks. It appears that many investors were sold the fund outside the Isle of Man as a low-risk opportunity.

“At the time, the downturn in the market was not foreseen so many regarded this asset class as being lower risk.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. David Johnson 8th June 2010 at 8:58 pm

    Usual trick from the Isle of Man government trying to blame the unlicensed, unqualified and unregistered “introducers” who the directors of the Premier Low Risk Fund plc employed to help promote the Fund.

    In fact portfolios of geared traded endowment policies have NEVER been regarded as “Low Risk” investment Funds – but apparently the Isle of Man government considers it acceptable for Island based Funds to receive the proceeds of misleading advertising.

    Investors are warned. Never bank or invest on the Isle of Man.

  2. Premier Shareholders Group 9th June 2010 at 9:32 am

    The directors of the Premier Low Risk Fund promoted the product (to pensioners) by producing a series of glossy brochure which gave prominent advertising to minor exit charges.

    Unknown to the pensioners another exit penalty – unlimited in amount and duration – had been hidden deep in the product contract small print. This additional exit penalty was described in highly technical terms which could only be understood by a skilled financial expert (and not by the unqualified and unlicensed “introducers” employed by Premier to assist in promoting the product).

    This hidden charge caused many pensioners, desperate to recover their savings from a falling/failing fund, to suffer another 28% loss. This from a Fund that Premier had advertised as offering “Capital Security and Growth” and “Capital Guarantees which cannot be reduced or taken away”.

    And members of the Isle of Man government?
    They just sit back and watch it happen!

  3. Penny Chapman 9th June 2010 at 1:59 pm

    Will the directors of the Isle of Man based Premier Low Risk Fund plc (a portfolio of geared TEPs) kindly explain why they circulated the Fund’s glossy sales brochures to pensioners advising them, and I quote :-

    “A suitable alternative for investors seeking returns in excess of bank or building society deposits without the volatility normally associated with equity related investments”.

    And then explain why I lost almost 35% of my life savings plus another 30% when my (anxiety ridden) redemption was subject to a previously undisclosed exit penalty.

    Banks and building societies do not operate like this so why did the Fund directors pretend that their Fund could be compared to them?

    And why do the Isle of Man financial services regulatory authorities continue to condone the director’s conduct as if it were normal practice on the Island?

  4. Penny Chambers 9th June 2010 at 3:16 pm

    Will the directors of the Isle of Man based Premier Low Risk Fund plc (a portfolio of geared TEPs) kindly explain why they circulated the Fund’s glossy sales brochures to pensioners advising them that the Fund offered, and I quote :-

    “A suitable alternative for investors seeking returns in excess of bank or building society deposits without the volatility normally associated with equity related investments”.

    And then explain why I lost almost 35% of my life savings plus another 30% when my (anxiety ridden) redemption was subject to a previously undisclosed exit penalty.

    Banks and building societies do not operate like this so why did the Fund directors pretend that their Fund could be compared to them?

    And why do the Isle of Man financial services regulatory authorities condone this conduct?

  5. “Product literature describes the fund as “relatively low risk”…..

    Relative to what?
    Sticking your head in a lion’s mouth?

    In this case the lion clenched his jaws on pensioner’s life savings and will not let go.

    Shame on the directors of the Premier Low Risk Fund plc. And even more shame on the Isle of Man government regulatory authorities who have built a financial services industry based on this kind of behavior.

    Give the pensioners their money back.

  6. The financial regulator on these UK offshore Islands are just not up to the job. They are only interested in keeping people employed in the Islands at your or any investors expense. I have lost money in Landsbanki Guernsey where the local Guernsey Government will not even hold an open public enquiry to this scandal. The IOM is no better, it has just released part one of their enquiry and fill the report with absolute bull. The facts remain that both Guernsey and the IOM financial regulators were at fault and should cough up the loss’s to all depositors in those failed banks. But with funds like for example Glanmore Property fund based in Guernsey this too has lost well over 75% of its value and is still locked up for withdrawals after being so since December 2007. I had £450,000 in the fund and it now has a value of £75,000. Yet still I cannot get to it for 4 years, an absolute joke that these governments bodied set up to protect investor/depositors take the money for the job but actually do little to protect Jo Public. You just cannot trust to place any of your money in any one of the UK offshore Islands. You must always place your money in a country big enough to support you in times of hardship. Don’t invest your money in any so call insurance bonds as they too are not safe, if the investment goes belly up, the insurance company after taking your money up front will just leave you to the administrators as is happening right now with the collapse of KSF(iom) and Skandia based on the IOM. Don’t trust any independent financial advisors they will not look after you, they are just after your money and their fat commissions. Stay off the Isle of Man and Guernsey,and don’t trust any Insurance company that’s says your money is safe with us. Its’ not ! Bury it in the garden.

  7. I still have (for me) a substantial amount of money in this fund and am at a loss as to what to do for the best. In such difficult times I cannot afford to lose what now remains of my life savings.

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