Antonio Flores’ Blog

(Photo by Jim Linwood)

For financial and insurance companies based in the Crown Dependencies (Isle of Man, Guernsey and Jersey), the advent of the long-awaited Brexit will have no impact whatsoever as these territories are not part of the European Union (EU) and are not included within the scope of the UK’s membership of the EU.

Because but for those very companies, whether “brexiteers” or “remainers”, operating within the EU was never a problem despite not being licensed, authorized or regulated. But how so?

If we take the example of Spain, the likes of Old Mutual International, RL 360º or Generali have operated with infinite impunity for years, selling all manner of unregulated single- premium life insurance policies or, rather fancifully described, investment-linked assurance schemes (“ILAS”) through equally unregulated brokers.

It is believed that British expats in Spain have tens of millions deposited in a vast array of financial and investment products that these insurance platforms peddled for years, in exchange for substantial fees for managers and brokers. Many of these victims have lost substantially, and some have nothing to show for it. In these crown dependencies, the word “consumer” has no space.

Fortunately, Spain thinks differently and in the first of its kind, a case for civil fraud against Old Mutual International Isle of Man is going to trial in Marbella, on the 20/5/2019. Not even the best lawyers money could buy has saved this company from being closer to having its best-preserved secret aired publicly: that they were illegally selling insurance in Spain, for years, with absolutely impunity.

If the Court of First Instance rules that Old Mutual did indeed operate in Spain unregulated, hundreds -thousands perhaps- could follow suit and trigger yet another scandal in the already dubious Isle of Man, where insurance represents 14% of the economy (and financial services more than 32%).

To be updated on this case you can call or email us and of course, feel free to attend the public trial should you wish.

Antonio Flores Litigation Generali Guernsey, Old mutual International, RL 360º, unregulated insurance companies

The collapse of Continental Wealth Management (CWN), an Alicante-based advisory firm, has left tens -possibly hundreds- of investors worried sick.  CWM was not regulated to provide investment advice in Spain and was loosely regulated to provide insurance advice, through German-based Trafalgar international (who also does not appear to be registered in Spain).

In the world of the investment ‘smoke and mirrors’ expat business, where few things are what they appear to be and what`s real is often portrayed to be something else, clarifying concepts becomes a necessity.

So, let’s get under the bonnet of these clandestine firms (this article does not allude to properly regulated advisory companies) to know what are the real chances of victims caught by the lack of scruples of runaway bogus consultants:

• Most of the IFAs currently operating with the expat market in Spain are not regulated.
• Equally, some of insurance or pension providers have never been regulated to operate in Spain (Old Mutual Isle of Man, Premier Group Isle of Man, Generali Worldwide Insurance Guernsey, RL 360º etc.), thus falling foul of Spanish laws that declare all such policies in violation of national laws and consequently, null and void.
• Very often, investments are carried out via ‘life-insurance/assurance companies’ that provided wrappers, whole-of-life or unit-linked policies. These policies are linked to an investment portfolio.
• Whether offered validly in Spain or not, life insurance policies linked to an investment are being declared void by the Spanish Supreme Court because they do not consider them life insurance policies. The reasons? Well, the calculation of the premium and payout lack ‘actuarial’ methodology, there is no transfer of risk from insured to insurer and it is irrelevant for the insurer if the insured party lives over a certain date, or dies.
• Courts ruling on the nullity and voidness of a life insurance policy will order the company to reimburse the premium in full (minus any surrenders made), plus annual legal interest and without detraction of fees or commissions charged.
• Financial or insurance mis-selling can be said to be automatic where the agents are not regulated (nobody can provide valid advice if not regulated). This violation of mandatory laws implies the responsibility of the principal (i.e. insurance or pension providers).
• Claimants should aim for Insurers, Investment Funds and Pension Providers.
• Lawyers should be able to identify the best way forward, always aiming for compensation (and not retribution).

Antonio Flores Litigation Generali Worldwide Insurance Guernsey, Irish Life SPanish Investment Bond, Old Mutual Isle of Man, Premier Group Isle of Man, Prudential wealth management, RL 360º, Skandia