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How to spot scams – fixed guaranteed returns!

Whilst climbing the Nevis peak and soaking up the sunshine on the beach over a long lazy lunch may be a great idea for your next Caribbean holiday … is it the place you would choose to place your life savings?  If you have a keen eye you will spot St Kitts and Nevis on the map above … but only just!

 

Nevis is a tiny island in the West Indies, and is the home for an investment that I have recently been asked to review on behalf of potential new clients who have been approached by telephone and email by a company offering ‘guaranteed’ returns of 10% pa.

 

My initial response, before being sent the information to review, was that anyone offering you a guaranteed return of 10% pa is about to rip you off!  Having now reviewed the information sent through to me, I can confirm that my view remains the same, and here’s why …


With a trained and educated eye it is possible to work out if something may not be quite what it seems fairly quickly, but it’s important to know what to look for, so here’s a few tips that might help you avoid a financial disaster!

 

Look for an address on their contact information

 

If their contact information only gives you the option of filling out a contact form, an email address and at best a phone number … think twice.  It may mean that there is no physical presence in the country that they claim to be based in, making a complaint or even just speaking to someone potentially very difficult.

 

Check their email footer and website

 

If the company are regulated, usually their email footer and website will include some reference to their regulation, including a licence number.  No regulation equals no protection if things go wrong!

 

Glossy brochures

 

A lengthy brochure with nice pictures and lots of what I call ‘fluff’ can be carefully worded and designed to confuse you.  The one I have recently reviewed had 48 pages!  Often, scammers will refer to their ‘partners’ and use the logos of well known, well established, reputable organisations in order to associate themselves in the same category and to put your mind at rest in terms of who is looking after your money.  The reality is though, that ‘partners’ can be regulated to conduct specific types of business themselves, but the company you are dealing with might just use them for currency exchange when you are transferring your money for investment … don’t let well known logos in glossy brochures fool you.  You need to understand how they are connected, if at all, with the investment being suggested to you!

 

An offer of tax free wealth accumulation

 

Every country has different guidelines when it comes to the taxation of investments.  For instance, if you live in Spain, the only tax efficient investment is one that is called a Spanish Compliant Investment in its product literature.  If it doesn’t say Spanish Compliant it doesn’t allow tax free wealth accumulation, and tax is payable on the growth/interest each year whether you draw it or not.  It’s important to check the rules in your country of residence and make sure any information is given in writing.  The investment I have reviewed states that there is tax free wealth accumulation and yet the company do not offer a Spanish Compliant investment!

 

Is the investment targeted at professional investors or retail investors?

 

Historically, there has been very little understanding of the difference in the level of protection afforded to a professional investor versus a retail investor.  Investments designed for professional investors are not required to satisfy the same standard of regulatory guidelines as investments designed for retail investors.  This is one of the quickest ways to find out if the investment is being marketed in the correct way.  Do you consider yourself a professional investor?  Typically, a professional investor would be experienced at making investment decisions and have at least £500,000 in assets.  Scroll to the regulatory information from the product details/brochure and you can usually find out quite quickly if the words ‘This document is directed only at and contains information about products and services for Professional Investors.  We do not undertake to conduct business with retail clients.’  If the investment is directed at a professional investor, you have little to no protection from any regulator if things go wrong.

 

The company promoting the product is working as an introducer

 

Check if the company promoting the investment are regulated themselves.  Look for wording like ‘as a professional investor you acknowledge that xxxxx can not be held

liable in respect of any losses, delay, reduction in value, performance or dispute. xxxxx

has no responsibility to ascertain, investigate or confirm the validity of any qualification, experience or suitability of any partner, financial advisor, third party or investment.’

 

This is a clear warning sign that you have no protection in the event of a dispute at all, but unfortunately, this type of wording is often hidden towards the end of a nice glossy brochure offering fantastic returns!



Take note of the jurisdiction and law governing the investment being offered

 

Look for wording like ‘Your Plan is governed by and construed in accordance with the laws of Nevis. In the event of any dispute arising out of your Plan, the same will be resolved according to the laws of Nevis, having sole jurisdiction over this agreement.’

 

It’s important to understand that it may be difficult to fight your case in the event of a dispute if the law of a Caribbean Island in the West Indies is what you’re up against!  If you end up in court you may be required to travel to Nevis to present your evidence in court (or appoint a lawyer based in Nevis to do so on your behalf).


Regular and pressurized follow ups, intimating a sense of urgency to ‘catch the offer’

 

Any company who doesn’t give you an appropriate amount of time to digest the information being provided and to consider all angles before signing on the dotted line is desperate, and working in an unprofessional way.  Don’t be fooled by ‘special offers’ that end tomorrow, or next week.  Remember, if it’s too good to be true it usually is!  Don’t let anyone pressurize you into making snap decisions.

 

This list is not exhaustive, but I hope it has given you some clarity in respect of what to look for to spot a scam, or even to identify an investment return that is promised but unlikely to be delivered.

 

At Speed Financial Solutions, our aim is to ensure that you are able to enjoy life while we take care of your finances, ensuring you’re set up in the most tax efficient way for your particular circumstances and maximising any tax efficient investment opportunities as they arise.  If you are considering how best to set up your finances for your life in Spain please contact us.

 

Speed Financial Solutions are a highly qualified and regulated financial services provider looking after clients throughout Spain and the UK.  Established in 2010, we provide a discreet and comprehensive service to individuals, and our service is tailored to suit your needs taking advantage of tactical opportunities as they arise in respect of your financial planning.

 

Our Principal, Andrea Speed, is a qualified Discretionary Investment Manager specialising in Investment and Risk, Taxation and Trusts,  and a qualified Pension Specialist.  Andrea is also a Fellow of the Chartered Insurance Institute (CII), which is the world’s largest professional body for insurance and financial services in the world. 

 

Fellowship is the highest qualification awarded by the CII (Level 7) and is universally regarded as the premier qualification.  It is a major achievement in the financial industry and demonstrates the acquisition of skills and knowledge at the highest of levels.  Along with a Fellowship, Andrea is a CII Chartered Financial Planner.

 

Please take a look at our website – www.speedfinancialsolutions.com

For further information contact us on Tel 951 315 271 or 951 318 529

 

We are happy to discuss your own situation in more detail. One of our advisers would be pleased to spend some time with you either in your home or at our office to review your current savings, investments and pensions, so do call to make an appointment. Our Financial Review is completely free of charge and without obligation.  Follow us on Facebook for regular updates.

 

This communication is for information purposes only based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

 

Andrea J Speed FPFS (DM), M.A.

Principal, Fellow and Chartered Financial Planner

Speed Financial Solutions

22 May 2024

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