Mis-selling row hits Towry
Independent financial adviser Towry Law, about to demerge from the troubled Australian group AMP, faces possible legal claims of tens of millions of pounds for allegedly mis-selling geared with-profits bonds.
Independent financial adviser Towry Law, about to demerge from the troubled Australian group AMP, faces possible legal claims of tens of millions of pounds for allegedly mis-selling geared with-profits bonds.
Towry Law International is believed to have sold about £200m of with-profits bonds in which thousands of expatriates in Europe, the Middle East and Asia have taken out a loan, sometimes up to three times their original investment, to increase their exposure to the policies. The total geared with-profits bond market is estimated to be £1.5bn.
An action group of Towry Law clients who claim they have been mis-sold is being formed in Cyprus. Some of its members have lost more than £100,000, while one client in Hong Kong has already started legal proceedings.
"I have documents to show Towry Law said geared with-profits was a low-risk and capital protected product. But it has been shown to be a speculative investment," said Len Sayer, a retired policeman living in Cyprus. "We trusted Towry Law but some people have lost everything. We have taken our case to the Cyprus regulators and are prepared to take legal action."
Bill Tatham, managing director of Towry Law International, denied clients in Cyprus were told geared with-profits bonds were low-risk: "Our compliance departments in Hong Kong and the UK have reviewed the cases and said there was no mis-selling. We are prepared to go to court."
He also pledged to fight the legal action in Hong Kong "because our client decided to encash the policy against our advice and therefore was hit with the exit charges".
Mr Tatham added: "The regulators investigated in Hong Kong and decided there was no reason to take any action. It is in the hands of our lawyers and we will fight it."
Gearing investments can increase returns but can also multiply losses. With the decline in with-profits bonus rates and the imposition of exit charges on bonds, one of the banks lending money, Guernsey-based NM Rothschild, has asked clients in policies managed by some of the UK largest fund managers, including Scottish Mutual and Clerical Medical, to set aside more money or collateral to cover the loans.
Clients who can't provide either mustcash in their policies to pay off the loan, risking heavy exit charges.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies