In an email seen by International Adviser, Thames River International director Nigel Ball has written to the leaders of IFA firms to warn them that the Code “may jeopardise the ongoing and future success” of their businesses.
It is not clear from the email what Thames River International’s business offering is, however Ball offers to “introduce” IFA firms to alternative, non-Isle of Man-based, offshore providers.
The firm is based in Hong Kong and the Philippines.
The industry source told IA that this type of business promotion goes on “all the time” and needs “to be exposed”.
“I think it’s up to Isle of Man companies and others to say to the advisers you should be proud to put your business in a jurisdiction with good regulation. And it’s my job, among others, to convince advisers that’s what they should do rather than cutting and running to a dodgy jurisdiction.”
Life company support
The email is a marked departure from the messages coming from the life industry and IFAs over the past year, which have been supportive of the greater transparency initiatives announced by the IoM Financial Services Authority.
When worldwide commission and fee disclosure was first tabled in 2016 for Isle of Man-headquartered life companies only, it created quite a stir – specifically around competition issues with life companies not based on the island.
Consultations between the regulator and industry saw plans for generic disclosure scrapped and other changes implemented to avoid duplication or conflict with other jurisdictions.
Senior representatives of Old Mutual International, RL360°, Canada Life and Zurich recently spoke to IA about their preparations for the Code’s deadline.
Cut and run to dodgy jurisdictions
At IA’s Fund Links Forum in September 2017, RL360° chief executive David Kneeshaw spoke about the concern that “some advisers will go to dodgy jurisdictions for their business rather than the Isle of Man”.
“I think it’s up to Isle of Man companies and others to say to the advisers you should be proud to put your business in a jurisdiction with good regulation. And it’s my job, among others, to convince advisers that’s what they should do rather than cutting and running to a dodgy jurisdiction,” he said.
Not required in Malaysia
In his email, Ball specifically mentions “Ailo member companies, including but not limited to RL360°, Friend Provident, Investors Trust Assurance, Old Mutual International and Hansard”, as companies that have “made a decision to impose upon [IFAs] potentially penal rules, conditions and disclosures that may jeopardise the ongoing and future success of your business”.
“Rules that are not called for under the rules governing business written by Malaysia-based brokers,” he said.
From 1 January 2019, life companies headquartered in the Isle of Man will have to provide bespoke key information documents for clients that outline all of the fees and commissions paid to advisers.
“There are professional, high quality and fully regulated offshore insurance and investment product providers, in other (non-Isle of Man) jurisdictions which will not force you into such commission and fee disclosures,” Ball wrote.
“Using such an offshore provider will allow you to continue to run your business in line with your current rules and practices and without having to disclose your fees and commissions.”
Bethell Codrington says:
If N Ball cannot justify his commission to a client, the chances are the client is being ‘ripped off’.
No doubt he will be recommending Life Companies where you cannot even find out who the beneficial owner is.
Anyone know who owns Thames River International? I have a hunch…..
Paul Allan Jeffreys says:
I’m not sure none IOM locations are ordinarily dodgy as this article describes. Cayman has fantastic infrastructure as does the Channel Islands and a number of other places. Full disclosure just means less fees for businesses but if one can justify what the fees are for then it shouldn’t be a problem for anyone and to amortize these fees over many years is sensible. Clients have to appreciate they have to pay fees or do it themselves and advisers need to raise their game to prove they are worthy of their fees.
Christopher Lean says:
Unfortunately, there will be some that listen to this.
Maria Madrid says:
There is sufficient evidence in the public domain to.suggest that the Isle of Man “regulator” (FSC) is corrupt and not fit for purpose. This may benefit financial companies based on the island- but has disastrous consequences for “investors” …
See the Premier Group and Louis Group – current financial “scandals” which the FSC should have resolved years ago.
Paul Wyatt says:
Why would any reputable adviser mind disclosing what they earn?
adkinson@private-capital.com.hk says:
I have never heard of nigel ball and his thames river outfit but he’s NO spokesman for anybody in HK, apologies to the Philippines but its hardly a hot bed of International Regulation.
The IOM insurers have had their collective heads buried in the sand for too long, commission disclosure is well over due for those firms not regulated to a standard sufficient to be able to offer NONE insurance solutions to their clients.
Please do disappear off to the dodgier less regulated regimes and stay there.
adkinson@private-capital.com.hk says:
Thames River, a name synonymous with all that was decent in the Industry, a case of blatant plagiarism but lets put that to one side for now.
Seems its some sort of third party distribution model, if the garbage they are peddling is being pushed in HK then a check on licensing is called for. If SFC regulated firms are ”using” them which I doubt then its clearly a breach, if none SFC regulated firms then its worse and needs to be stopped.
Stuart Langan says:
I have been in this industry for 34 years and open with clients on commission and fees for 32 of the past 34 years without any problems. However what I have seen charged Off-shore by product providers to create high commissions for IFA’s is a disgrace and also with special deals for voluntary organisations and large companies in return for higher volume business which saddles clients with higher charges. Furthermore; there is no place in investment advice for a charge structure set against the original investment, or portfolio value, whichever is the higher, and then further saddled with severe exit penalties if the clients exit early. No client should have to pay a penalty for asking for their own money back or when seeking change to a more appropriate product or Adviser, especially when the initial advice was clearly suspect! Trustees and Product Providers take fees off clients so should have a ”duty of care” and also be accountable to ensure IFA’s advice is appropriate. It is not good enough to say ”not me Gov we do not give Financial Advice” but still take the clients money in any case! The absolute majority of Insured Bond Wraps I have witnessed are stuffed full of inappropriate high commission funds and structured notes all with additional early exit penalties. Some also have evidence of churning. The client has no chance and these are a scar on the industry. The sad thing is the main perpetrators have been largely responsible for bringing enforced legislation to counteract THEIR past abusive actions but are not being made accountable and driven out of Financial Services for ever due to these past indiscretions. The most complained about Financial Services providers appear to be the largest and then change their Business Model and still retain the strongest voice!
Sergio Rivera says:
@Stuart Langan, so very true.
I have been advising clients for the last 20 years plus and have generally preferred to use Bermuda based carriers or other jurisdictions offering products on a segregated account basis.
Whilst I do not have an issue with commission disclosure per se, I do have an issue in being dictated to by a group of life companies who, in all my years, have turned a blind eye to shoddy sales practise and, over time, lost control of and refused to take responsibility for their own bad practises. It seems to me that forced disclosure et al, is their attempt to control the misselling of their products going forward.
When David Kneeshaw refers to ‘dodgy’ jurisdictions, one need look no further than the IOM!!