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 I fully accept that the des-cription is no longer applicable.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.”