Finally, the Isle Of Man have taken steps to protect consumers investing in their jurisdiction upon the advice of financial advisers.
The Manx Insurance Association has issued guidance to Isle Of Man insurance companies, stipulating checks that need to be undertaken before a terms of business is granted to financial advisers. The MIA said that the guidelines are there to provide a consistent approach although they are currently only guidelines. However, they should become minimum standards by the end of this year.
The guidelines that set out details on the information to be received about advisers such as details of the business, references and credit history, together with ongoing monitoring have been submitted to the Isle Of Man Insurance and Pensions Authority (IPA) to be approved.
Our View
We have come across many instances where consumers have been given advice they weren't happy with but have no recourse because of poor regulation and no ability to complain independently. Many advisers have no professional indemnity insurance and people would have to pay to take the adviser to court. This can be a drawn out and expensive process with no guarantee of winning.
Many insurance companies that accept business through financial advisers state that there is no relationship between them and the adviser and that they have no responsibility to the client. Basically, they are happy to accept the business but want no responsibility.
By thoroughly investigating an adviser before accepting business from them will significantly reduce the risk of business being accepted from unqualified and poor reputation advisers. This is great news for consumers and should increase the confidence of people wanting and needing to take advice regarding offshore investments.