Investment Scams 3

Generally speaking, members of the public rely on professionals to provide services that they do not have the knowledge or experience to do themselves. I have tried to replace a toilet cistern with quite amusing results and now rely upon the services of a plumber.

I should imagine that if DIY dentist kits (drill included) were available in the supermarket, they would not be a good seller.

We do tend to rely upon the professionals that we choose to help us with our lives but as with all professions there are a few cowboys amongst the decent tradesmen. This includes Financial Services. When financial advice is given with the main objective being benefitting the person giving the advice, then serious long-term financial problems can result.

In 2013 EFPG decided to not to recommend commission paying products for our regular personal pension and savings plans – unless we were specifically asked to. We thought them inflexible, expensive and had extremely confusing and complex charging structures. Instead EFPG decided to design our own products with simple and clean charges, no commissions and as a result the plans are extremely flexible. We take great care in listing every cost that our clients’ savings and investments will face. EFPG wants our clients to have a pleasant investment experience with no hidden surprises. We also offer on-line 24 hour access so that our clients can monitor their investments. By doing this we hope to be seen as transparent, honest and trustworthy.

Not every IFA has the same philosophy.  In 2015 we were approached by an introducer that had pointed clients to two Advisory companies who then advised these clients into pension transfers and a truly awful investment.

The Cayman Island Fund

EFPG was presented the fund by the introducer to see if we would accept it in our overseas pension if they arranged the financial advice. We rejected it because on reviewing the investment prospectus our interpretation was that it offered no investor protection whatsoever. The directors and investment manager could do pretty much as they pleased and invest pretty much without restriction.

Time proved us to be right.

The introducer also controlled the fund’s investment management company. The investment management company invested in assets that the introducer also controlled. The investment management company also made investments in a way that the fund was not permitted to make. Additionally the same introducer also acted as the financial adviser to everyone (that I know of) who invested in the fund either from his own company or as a representative of another advisory company.

Completely staggering.

Currently the fund is being liquidated (meaning that the fund’s assets are being sold) and investors are facing very significant losses and delays in getting what they can out of the fund. Some investors were relying on the income from their pensions – income that has not been forthcoming for over 2½ years.

Although pension providers are not expected to be investment experts, a cursory glance at the fund and the surrounding arrangements should have set off all kinds of warning signals. Additionally, the fund had only just come in to existence, as had the investment manager.

There are a couple of easy methods that enable us to reject an investment offhand without spending too much time and effort reviewing the proposal. Firstly we look at the companies that provide services to the fund (auditors etc.). If the companies are not well-known this is a warning sign. Secondly we look at the Conflicts of Interest section and if it isn’t blank or short, we steer clear. Conflicts are a clear sign that a scheme exists not to achieve returns for investors but for insiders to strip out their cash in fees before it inevitably collapses. The investment mandate is also good reading as it permits us to judge how risky a fund is – risk with respect to liquidity and capital being the most pertinent elements of risk for a pension investment.

Obviously the stress and financial hardship suffered by the investors is the worst aspect of this mis-selling fraud/ investment fraud. However, the IFA acting in such a duplicitous manner compounds the issue - the investors have been betrayed by a trusted “professional” and as a result are extremely unlikely to seek financial advice in the future which could mean they would continue to make bad decisions.

The above shows that you do need to do your homework when seeking financial advice. Get personal recommendations, look online, make sure that the investments being advised are regulated and suitable for retail clients and if you are being shoe-horned into an investment bond, find out about the costs to you and the inflexibility of the product.

Opportunities in India

India – facts and figures



  • India is the fifth largest economy in the world – hot on the heels of the UK.

  • India’s economy is the fastest growing economy in the world - annual 9.4% growth in GDP between 2006 and 2016

  • Forecasts consider that the economy will double in size to GDP €5 trillion in 6 years and to overtake the US by 2030.

  • There are 25 million new births every year – that’s one Australia every year.

  • The Real Estate market is expected to hit $650 billion in 6 years and $1 trillion by 2030.

  • India has seen significant growth in infrastructure spending. It’s been estimated that India needs $5 trillion in infrastructure investment to sustain its economic growth.

  • Initiatives like ‘Make in India’ are aiming to make India a global manufacturing hub.

    In July 2018, Samsung inaugurated the world’s biggest mobile phone factory in Uttar Pradesh and will double the company’s mobile phone production capacity to 120 million units by 2020.

  • The country is in a tech start-up boom. This start-up ecosystem is now the world’s third largest and is maturing rapidly. It has attracted over $20 billion inward investment in the past three years.

  • 9th largest Civil Aviation market in the world. 464 airports and airstrips today, with the aim to increase the number of operational airports by 250 by 2020.

  • India has expanded its solar generating capacity eight-fold since 2014 and achieved the target of 20 GW of capacity four years ahead of schedule. India plans to generate $200–$300 billion of new investment in renewable energy infrastructure over the next decade.

  • Tourism is expected to grow by nearly 5% year on year.

EFPG has forged excellent relations with an expert in the Indian market with links to some of the best fund managers.

If you would be interested in finding out more please follow this link or contact EFPG.


Investment Scams 2

As per our previous post about investment fraud, the most important point is to avoid it in the first place. Get regulated advice, get a second opinion and trawl through the internet.

Once your money has been invested in a fraudulent scheme it is likely that it has gone. Often any recovered funds are eaten by liquidation and legal costs in a process that can take years to conclude.

There are good alternative investments out there than can provide good returns but sorting out the wheat from the chaff is perilous.

In the media this week there has been another major mis-selling scandal that has cost investors £236 million. London Capital & Finance (LCF) secured the investment mainly from elderly investors who were looking for a way to achieve better than bank interest rates on their savings. LCF were offering around 9% p.a.

To manage to secure nearly a quarter of a billion pounds in investment LCF used the services of a marketing/distribution company and paid 20% commissions on the investment that they raised. Some simple maths here:

If an investor is expecting 9% return on their £100 investment, after one year they should have £109. Now, since LCF paid 20% commission £80 needs to grow to £109 – that’s over 36%. Admittedly that is a little sensationalist – although I have not read the terms and conditions of the LCF investment I should imagine that there would be a minimum term of 5 years or so in which case to generate 9% for the investor, LCF would have to make a minimum of 14% every year but more realistically closer to 18%-20% to cover costs and to make a profit for the company.

Regardless of whether LCF would have had to generate returns of 18% or 36% - they would have had to take very high risks with their investors’ cash to achieve this. Considering that banks might charge in the region of 5-8% for a secured loan to a small business, why would a company resort to paying 20% p.a. for a loan? The answers being that either they have no other options or that they have no intention of repaying the loan.

This story reminded me of an investment that was brought to EFPG a few years back.

The Providence Funds

On the face of it this investment appeared to be a little off the wall but had possible merit.


A salesman presented the opportunity to us as a pension investment with the advice being provided by other financial advisory companies. EFPG would only be supplying the pension.

The Providence funds invested in Brazilian factoring offering low risk 12%-13% investment returns. Factoring in simple terms is buying a company’s invoice at a discount, improving cash flow for the company instead of waiting for the invoice to be paid. Factoring is quite a commonplace activity.

EFPG rejected the proposal twice. The risks involved were too high.

Firstly, the Brazilian economy was in a poor state – perhaps a significant number of the purchased invoices might not be paid.

Secondly we were not convinced that the funds invested in Brazil would be managed to the standards as we are used to in the EU.

Finally and most importantly - the fund was being marketed as low risk but offering market beating returns.

Unfortunately EFPG was proved right. When the investors’ money (having been invested via a regulated Guernsey fund) arrived in Brazil, over 30% of it was not used to buy company invoices and could not be accounted for. Also undisclosed commissions were paid out.

A judge for the Royal Court of Guernsey described the Providence Funds as “a reeking pile of guano” and was told that there is no available cash to return to investors who put more than £37 million into the collapsed investment business.

It is quite possible that the salesman was duped by the investment company and was drawn in by the prospect of large commissions. Equally, if any pension provider had permitted the investment, the temptation of volumes of business and fees may have over-ridden any doubts about the quality of the investment.

EFPG has not researched the fraud fully and so we do not know whether it was limited to Brazil or if people further afield were complicit. Regardless, the warning signs were there. A huge carrot was being dangled – a virtually risk-free investment offering 12% returns.

Contact EFPG


Income & Pension Inequality


As today is international Women´s day we would like to comment on a series of factors that can influence a woman’s financial status and independence.

Income Inequality

The law is clear, men and women should be paid equally. However, in Gibraltar there´s is a wide gap in employment and earnings between men and women:

  1. The gender pay gap stands at 22.5%. This means that on average women earn 22.5% less than men which equates to 82 days of unpaid leave.

  1. Women account for 61.3% of people earning less than £12,000 per annum and only 19.1% of people earning over £60,000.

  2. 67.1% of people with  part-time positions are women and only 41.1% of those with full-time positions.

  3. In the private sector and the M.O.D. less than 40% of full-time positions are held by women. Only in the public sector are things more equal with women holding 54.2% of full-time positions.


So how can this inequality be addressed?

The first steps need to be taken by employers. Employers who want to close their gender pay gap need to overcome the traditional views on parenting roles, in which the mother is expected to look after the children. Women are as such often pigeon-holed into taking up part-time positions. This can have an effect on women’s career progression. Further,  men are assumed to be only suitable for full time jobs and this can become an obstacle for men to opt for part-time or flexible working if they will be taking care of the children.

In addition, there is sometimes an unwillingness by employers to take on women of a child-bearing age to positions of responsibility.  

Employers need to re-configure the idea of full and part time jobs. They need to incorporate more flexibility in the working hours that will allow women and men to balance their family lives and workloads.  Furthermore, employers need to ensure that career progression on a part-time basis is not only acceptable, but aspirational.

We know that many of the more poorly-paid occupations are those traditionally done by women, requiring skills traditionally regarded as ‘feminine’, such as people skills and caring skills. So women ‘choose’ to work as nurses, teachers, or shop assistants, while men ‘choose’ to be surgeons, construction workers or engineers. The issue here is that we undervalue traditionally female skills. But there is also a perceived wisdom that women choose low-paid occupations because they offer more flexibility, or are more family-friendly.

Opening up traditionally male sectors and occupations to flexible working would encourage more women to work in them, and more men to switch to working part-time.

Pension Inequality

Aside from being denied the potential to earn more money, the knock on effect is that women save around 40% less into their pension pots than men. Part of this may be that financial decisions are often linked to the traditional ideas about male and female responsibilities. The advice women receive on pensions generally comes from men (e.g. fathers or partners), deferring to them the decision-making about pensions. Women should be encouraged to take control of decisions that effect their own personal financial well-being.

In Gibraltar the problem is compounded by traditional pensions being insurance company-based products provided by the likes of Generali and RL360. These products can provide reasonable value for money if payments are made throughout the life of the policy until the maturity date. However, if payments are stopped for an elongated period – especially in the early years, the policy might lose significant value or even lapse with no value at all.

EFPG has a pension solution for young families. The Jubilee pension is inherently flexible and low cost as we manage and administer it. EFPG is therefore able to offer a 12 month break of payments for young couples who have a new child, that will have no detrimental effect on the value of their pensions. This is only available once the pension has been active for 18 months but we hope that this will encourage young couples to start saving early and close the gap in pension inequality.

Ethical Investing

More and more people are putting their money where their mouth is when it comes to investing and consider their own ethical values when making investment decisions.

“Sin stocks” such as shares in tobacco and arms companies are obvious omissions from portfolios. Inclusions may include shares in companies that have a positive ethical stance on environmental, social and governance (ESG) factors.

For most people the work involved in selecting appropriate companies to invest in and then trying to find a mix that will provide them with a profit is too complex and time-consuming. Fortunately there are fund managers specialising in sustainability and ethical investing that can cater for those with such investment requirements. The funds may not be an exact match for every investor’s principles but they can provide a good compromise solution if investing is not your forte.

EFPG has written a brief article about Ethical investing, expanding on the above and also covering what it means to invest ethically, a very brief history of ethical investing, comparisons in profitability between ethical and unrestricted investments and EFPG’s preferred solution.

Please follow this link to read more.

Contact EFPG


Investment Scams

Even experienced investors can fall victim to scammers. No matter how much experience and confidence you have with investments and finances, you could still be at risk. Investment scams are usually difficult to spot because they're designed to look like genuine investments. The scammers may have a professional looking website and documents.

The investments on offer are designed to be attractive - higher than market rate returns are offered and often are purported to be guaranteed. Our personal greed can easily conquer our common sense when a large enough carrot is dangled.

There is a difference between an investment that drops in value and an investment scam. Investment funds can lose value significantly but this is generally down to normal market fluctuations or investment decisions. If you are advised to invest in such a fund, your adviser should have informed you that the value of the fund can go down as well as up. Generally, after a drop in value over time a decently managed fund will regain what it has lost and start making gains.

Investment scams, however, can be designed to fail and will only lose value – potentially completely. Other investment scams may not be designed to fail but are significantly more risky than how they have been portrayed when sold to you. You may lose a chunk of the amount that you have invested and you may not be able to gain access to what is left for several years if the funds have been invested in illiquid assets such as distressed property or private equity investments.

There are lots of individuals and entities out there searching for people and companies to sell fraudulent or extremely high risk investments to.

Avoiding Scams

Obviously do not respond to cold calls or unsolicited e-mails and GET ADVICE FROM A REGULATED ADVISER before making an investment decision.

EFPG thought by releasing a series of blog posts detailing some of the questionable investments that we have seen, it might help our readers to avoid some of the pitfalls of investing.

No 1 -  The Kijani Commodity Fund

This fund was repeatedly presented to EFPG by other financial advisers to see whether EFPG (acting as pension trustees) would accept the investment in our pensions - we repeatedly rejected it.

The final time we were approached was when the fund was under investigation by the Mauritius regulatory authority. Subsequently the fund moved to the Cayman Islands, then suspended and eventually liquidated with a 100% loss to the investors.

It took EFPG a few minutes to reject this fund the first time round and on one occasion a new member of staff rejected it in around 5 seconds. Why? It had all the features of a Ponzi scheme.

The Fund’s June 2015 fact sheet suggested annualised returns of 20% were achievable and it had made just one loss month-on-month in four years.

The fund was supposed to be investing in commodities/co/mmodity companies but the performance of the fund bore no resemblance to the underlying commodity markets. The rationale of the incredible performance of the fund given to EFPG was that the fund made loans to a second entity and the interest receivable (not ever received) on those loans were the profits reported by the fund.

This second entity was called Kijani Resources and was an investment company mainly investing in commodity companies. However, the investment modus operandi, whilst being apparently above board, was subject to allegations that funds had been used to purchase shares in worthless shell companies whose Directors were personal/business acquaintances of the Directors of Kijani Resources. EFPG cannot state whether these allegations are factual or not but we can say that during our due diligence process, the information we gathered made us no more likely to permit investments in the fund than from our initial gut feeling.

The most famous Ponzi scheme of modern times was Bernie Madoff’s eponymous fund. For decades the fund reported strong investment returns that had been inflated by some $34 billion. A further $30 billion had been either misappropriated or returned to investors who had sold their shares at a false profit.


Why EFPG has switched to social media marketing and why your business might benefit from doing the same

EFPG took the decision to stop using radio as a means of advertising a while ago. We thought it was expensive and we were doubtful as to whether it was effective. Also, to relay our vision to our clients (both present and future) is not easily done squeezed between George Ezra songs.

EFPG’s aim is to be a lean mean pension machine – we cut down on our operating costs so we can afford to offer pensions with lower fees and no commissions. Obviously we cannot spread this message if we are paying a small fortune to do so.

The obvious solution was to switch to social media.

Currently EFPG posts a blog on our Website which we then post on Facebook, Twitter and LinkedIn. We use a free version of Hootsuite which enables us to schedule three posts on all three platforms. As we do not intend to annoy people by constantly bombarding them we just need to set up the schedule once a week.

Our aim is not to simply sell via Facebook as people would quickly get tired of seeing the EFPG logo with a boring sales pitch beneath. Being a Facebook user myself, when I see an advert I feel like my privacy has been impinged upon. So what we attempt to do is mix some sales-orientated content with interesting content that in a roundabout way illustrates our core values; namely transparency, low costs and quality advice.

Currently we only boost our posts on Facebook (due to the demographics of Facebook users). By “boost” I mean we pay for our posts to appear on people’s news feeds. In the last week we spent the princely sum of £8.28 and our posts reached nearly 6,500 people out of whom 300 people actively engaged with them. We have seen 25% increased web traffic compared to last month since we boosted our posts. These figures came from the Facebook native analytics tool - Insights – which allows us to see what content we post is effective and what is not. I’m sure we will look into Twitter and Instagram a bit more seriously in the future but for now getting to grips with Facebook and creating content is enough.

Considering more than two billion people use social media every day and the average person spends 135 minutes per day on social networks it is unsurprising that the number of small businesses advertising on Facebook has doubled to 50 million in recent months.

A final point to consider is that although you may be attracted by spending only £8.28 a week on advertising and engaging with 300 prospective clients, there are additional costs. You have to pay someone to create content and that content must look and feel good. So if you don’t have members of staff that have the requisite skills or suitable software, you will have to pay someone else to do this for you.

I hope you find the above of interest but unfortunately EFPG cannot advise you on social media marketing – just pensions, investments and protection plans.

Contact EFPG




Occupational Pension Schemes and Group Personal Pensions

EFPG has just posted an article about considerations that both employees and employers should consider about the Occupational Scheme or Group Personal Pensions that the employer is offering or is going to offer.

The article is not technical but covers general points that EFPG believes to be the most relevant areas that should be reviewed.

For employees the article covers the points:

  • How much will my employer pay into my pension?

  • How much will I have to pay into my pension? Is this flexible?

  • Will the combined contributions be sufficient to provide enough income in retirement? If not can you contribute more?

  • Where is my money going to be invested?

  • What costs will my pension face?

  • How flexible is the arrangement? Are there any penalties for altering/stopping contributions? Can the pension be transferred? Can the arrangement be cashed in and invested elsewhere?

For employers the article covers the points:

  • Should you offer your employees a pension scheme?

  • If so how much should you pay into it?

  • And at the end of the day will your employees thank you?

The full article is quite long but does give insight to the questions as posed above. If you would like to read it, please follow this link.

Contact EFPG



Reviewing your life cover

Should you consider replacing your life cover policy?

  • Are you paying smokers rates but have stopped smoking?

  • Did you start your life policy over five years ago?

  • Are you in good health?

  • Have your circumstances changed?

  • Does your current policy cover critical illness?

  • Is the level of cover still sufficient?

  • Is your level of cover fixed or is it periodically reviewed?

The cost of life insurance has dramatically reduced over the last few years, all the above are reasons to review your life cover.

You may be able to increase your level of cover without paying extra.

Did you know smokers rates are twice that of non-smokers? If you have given up for longer than 12 months we may be able to provide a cheaper option.

Old style policies did not have critical illness cover. Considering that you are more likely to suffer from a critical illness than die, this is worth considering.

Have your circumstances changed? Marriage, children it might be a good time to review levels of cover and include your partner.

For a free impartial review of your protection needs please contact us to arrange an appointment with one of our experienced advisers. If you do not ask you will not find out.

Contact EFPG


The Cost of Free Advice

How much does free advice cost?

That might sound like a daft question. The answer is obvious. Nothing - free means it doesn’t cost anything, Of course that cannot be the case unless a charity, government body or similar is giving the advice - even then that definition of free is arguable.

Financial advisers who offer free advice are intermediaries and are compensated by financial companies via commissions. So, there is always that angle of conflict of interest that one needs to be aware of. You really don’t know whether what they are selling to you is really good for you or good for them as a commission-generating sale. 

There are less clear costs of not seeking advice as well.

The Cost of Education.

Do you want to spend the time to bring yourself up to a decent level of knowledge? Then to stay updated with the constant changes? How long will it take you to become knowledgeable?

The Cost of What You Don’t Know.

There are things that you know you need to learn, but what about the things that you don’t know you need to learn? How are you going to become aware of them?

The Cost of Consequences.

Do you understand how different things are interrelated? Actions in one area can often cause harm in another. How are you going to become aware of all the interconnected relationships and consequences?

The Cost of Mistakes.

Can you afford to learn from your mistakes? Some mistakes are minor, while others can be quite serious. If you make a mistake, how costly will it be, and do you have the time and resources to rebound from your mishap?

The Cost of the Unknown.

Do you have the temperament to do what is necessary to succeed? Sometimes the correct action or behaviour is counter-intuitive. Professionals are trained to cope with unplanned difficulties and disasters. How will you cope?

The Cost of Time.

What is the value of your time? How will you determine when you are spending too much time trying to solve a problem versus the alternative of paying someone else to solve it?

While there is a clear cost associated with engaging a financial adviser these subtler costs of not working with one when the situation warrants it should be taken into consideration.  When you stand to gain more than the fee charged by your adviser, the time is right to ask for advice.

How EFPG Charges - transparency

EFPG prefers to follow the UK’s RDR framework even though there is no requirement to do so in Gibraltar. When providing advice e.g. for a personal pension plan we would state the cost of the advice to you, the costs associated with investing your pension contributions (trading and custody) and the costs of the selected investments so you can clearly see all of the costs associated with your pension arrangement. We are completely transparent in this respect to give you the comfort in knowing that your investment for your retirement has no hidden charges or commissions that could negatively affect the quality of your retirement.

For the full article please follow this link

Contact EFPG


Fancy moving to Italy

Tax incentives to move to Italy

New measures introduced in the Italian 2019 budget are designed to attract people who have sufficient economic resources to be able to contribute to the Italian economy.

From 1 January 2019, any retired immigrants who are not resident in Italy and are in receipt of a pension could be eligible for a 7% flat-rate tax on all their foreign income.

Some local authorities are even offering houses for as little as €1 if certain conditions involving restoration of those properties are met.

If you would like to know a little more please see the main article.


Blockchain - emerging from the shadow of cryptocurrencies

Everyone has heard of blockchain but most consider that it is synonymous with cryptocurrencies, especially Bitcoin.

Since the rise and fall of cryptocurrencies with Bitcoin trading at $3,588.38 (at the date this article was written) from a high of $19,783.21 in December 2017, one might consider Bitcoin and hence blockchain is dead or of little relevance.

This could not be further from the truth.

Blockchain technology has far more applications that are being researched and exploited.

This week HSBC has claimed to have settled three million foreign exchange transactions and made payments worth $250 billion using blockchain technology.

Blockchain is certainly not limited to facilitate financial transactions. The technology is being applied for uses in the logistics industry, to develop a decentralised internet, for real estate transactions and more.

Although crytocurrencies may have not been the best of investments at the end of 2017, investment opportunities in companies developing innovative solutions using blockchain might be very rewarding in the coming years.

For the full article please click here.

Contact EFPG