A beefed-up regulatory system could have prevented British expats David, 35, and Angela, 33, from locking into an inappropriate savings plan soon after arriving in the UAE in 2014.
The couple, who did not want to reveal their full names, were delighted to start their new lives working in education in Abu Dhabi until they invested in a product they did not really understand. Now they stand to lose tens of thousands of pounds after being given the hard sell by an international firm of advisers, which was originally introduced by their employer at a staff meeting.
David and Angela were keen to save a chunk of their tax-free salaries, but wanted to access their money within two or three years, to fund a deposit on a buy-to-let property in the UK. “Instead, our adviser locked us into a 35-year investment plan run by an international insurance company,” David says.
“Our adviser kept sending us more and more paperwork and hassling us to sign it. Once it said it would send a courier to pick up the signed documents after just 20 minutes. We had no chance to digest what we were getting into.”
David and Angela committed to investing £700 a month, but more experienced expats soon alerted them to their mistake. “When we look closely at the small print we found the policy contained absolutely horrendous clauses, clawing nearly all our money back if we stopped paying in.”
They have already invested £20,000 and are reluctant to throw good money after bad but risk losing the money they have paid in. “The insurer charged 100 per cent upfront commission, with punitive penalties for pulling out. We will lose 95 per cent of the money if we stop contributing now.”
David and Angela first took their complaint to the advisers. “It said that as we signed the paperwork there was nothing it could do. I told them I believed they used underhand tactics to persuade us to sign but they did not respond to that.”
Next, they complained to the Insurance Authority. “It simply told us to complain to our adviser again,” says David, adding that seeking redress in the UAE isn’t easy, given the many different regulators across the various emirates. “The insurer [behind the investment plan] is registered in the Isle of Man, so I am now talking to its Financial Ombudsman Service to see if it can help.”
Currently, David and Angela are taking advantage of the plan’s one-year payment to halt their premiums while deciding their next move.
To make matters worse, David was also persuaded to transfer his UK local government pension into a scheme based in Malta. “The transfer value was £45,000. Having looked at the charges, there will be nothing left when it finally matures.”
David and Angela describe investment plan selling as “an absolute free-for-all”. “People desperately need regulatory protection or they will continue to get fleeced. I will never go to a financial adviser in the UAE again.”
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