A group of UK and international investors have launched a multi-million-pound claim against life insurers Quilter International and Friends Provident International.
The claim, which has secured litigation funding, centres around what the group alleges was the mis-selling of “high-risk funds” through insurance wrappers to “unsophisticated British and international investors living overseas”.
The products were described as life assurance policies, but the group said they were “unit-linked” and featured high risk funds which were “entirely inappropriate for unsophisticated investors”.
The group said that many of the expats are now retired and have lost their life savings.
The case is being brought by UK-based law firm Signature Litigations, which said that the insurers “sidestepped British investment regulations” by selling over £100m ($124m, €112m) worth of these products via the Isle of Man.
Both life insurance companies deny any wrongdoing.
Financial difficulty
Daniel Spendlove, partner at Signature Litigation, which is handling the matter in the Isle of Man Court, said: “Much has been made of the power of litigation funding to level the playing field when individuals take on major companies, and this claim is a perfect example.
“Potential claimants will be able to seek redress for their lost investments without worrying that, by seeking justice, they will be plunged into further financial difficulty.”
International help
The law firm said that Old Mutual International, as Quilter International was then known, and FPI received several warnings prior to the funds collapsing, and “appropriate due diligence would have revealed the potential issues with the funds”.
Coburn Corporate Intelligence (CCI), the international investigation firm assisting in the management of the claim, has called for affected investors to sign up to the group action claim against OMI and FPI in the Isle of Man.
Both law firms state that the funds were linked to the collapse of LM Investment Management, which saw investors lose millions invested in funds including the LM Managed Performance Fund, Axiom Legal Financing Fund and the Premier New Earth Recycling Facilities Fund.
Victims of LMIM have struggled for years to recoup some of their losses.
One individual, who suffered the loss of her £330,000 pension pot, recently took her trustee FNB International to court in Guernsey.
Niall Coburn, principal of CCI, said: “Financial Conduct Authority (FCA) financial regulation quite rightly prevents unsophisticated investors from engaging with these high-risk funds, and it is a scandal that Quilter International and Friends Provident sought to circumvent this, effectively scamming British pensioners out of their retirement savings.
“We call on all who were impacted by the collapse of these funds to reach out to us, so we can work to secure compensation for the mis-selling of these products.”
Response
A Quilter International spokesperson told International Adviser: “We sympathise with these customers, however Quilter International is the provider of the life assurance policy and does not provide advice in respect of any underlying investments, as that is the responsibility of the customer’s investment adviser.
“We will be robustly defending the claims, however they have not been served at this stage.”
This sentiment was echoed in a statement from Friends Provident International (FPIL), which “denies all allegations of wrong-doing or liability”.
“FPIL is exclusively a provider of insurance products and does not provide investment advice. FPIL’s portfolio bond is a flexible and tax-efficient international policy through which a policyholder can invest in a range of asset classes of their choice.
“All investments are selected by the policyholder themselves, often with the assistance of an independent financial adviser chosen and appointed by the policyholder to provide personalised advice.
“FPIL is responsible for the set up and administration of the portfolio bond and places investments on an execution-only basis when instructed to do so by a policyholder. FPIL does not approve any asset as a suitable investment and is not responsible for investment management or performance.”
The statement continued: “Prior to entering into a policy, all policyholders are required to sign declarations acknowledging the nature of the portfolio bond, confirming that their independent financial adviser acts solely as their agent and has no authority to act on behalf of FPIL and accepting the risks associated with the investments they choose to make through the bond.
“Furthermore, prior to investing in certain funds, including the Axiom Legal Financing Fund and LM Managed Performance Fund, policyholders are required to sign a client confirmation form specific to the fund, confirming again that:
- the policyholder has read and fully understood the prospectus and marketing literature for that fund;
- FPIL does not endorse or approve any asset as a suitable investment; and
- FPIL is not responsible for any loss or liability to a policy arising from the investment.
“Where a fund is aimed at experienced investors (as defined by the local laws of the fund), policyholders are also asked to confirm that they satisfy the relevant definition,” the FPIL statement added.
