EU clampdown on unregulated financial advisers in Spain

 

The European Commission is to consider setting up an ombudsman to help expat victims reclaim against unregistered financial firms. It comes after a local pressure group, that represents over 1,000 victims, sent a dossier of information to Brussels. The Costa del Sol Action Group demanded action against the advisers who, it claims, have lost their clients over €120 million (£102 million). “It is good news as something has to be done about this bunch of rogues,” said group founder David Klein. “The current Spanish regulatory system is totally inadequate and ineffective. Dealing with the authorities is a constant game of ping-pong. Anyone can come to Spain and be a financial adviser; they could have been selling fish before they came here for all anyone knows." This situation could soon be coming to an end, after the European Commission confirmed it was to begin "a preliminary investigation of the problem". Foreign Office plans evacuation of expats 18 Dec 2011 It has asked for more information and the action group has called on all victims to write to the European Parliament outlining their experience. “This problem is causing untold stress and heartache in the expatriate community and it cannot be allowed to continue,” explained Klein. The European Commission is to study how investors would be able to make an official complaint against Independent Financial Advisers (IFAs). At present, there is no effective means for victims to make a complaint against product providers who work with unregistered IFAs. The group was also highly critical of the local media for its willingness to accept adverts from unregulated financial firms in a bid to maximise advertising revenue. To highlight the problem, the group included testimonials by members who were allegedly defrauded by one specialist investment brokerage, which it claims is "not regulated or registered". It said the company was able to trade, "collecting unsuspecting clients who are soon relieved of their money". One Costa del Sol-based financial adviser, Richard Alexander, said he was pleased with the EU’s response. “Bring on the review,” he said. “I have seen too many sad stories of people being turned over, badly advised or grossly over-charged by unregulated independent financial advisors in Spain. "It is entirely possible to provide professional, quality advice without the client losing out.”