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Royal Skandia…On The List of Legal Corruption?

The stories of heartache continue rolling in from investors feeling duped by groups like Friends Provident, Zurich International and Generali Vision.  

warningBut it wouldn’t be fair to ignore the horrific costs of Royal Skandia. One Hong Kong based financial rep suggests that 75 percent of investment platforms sold in Hong Kong are insurance linked. Known as variable annuities in the U.S., these products sold in Asia appear far worse than their U.S. counterparts.  

As this South China Post article explains, there’s a long (now very visible) trail of woe in the wake of these schemes.

Read the Article


Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School and Millionaire Expat: How To Build Wealth Living Overseas. My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions.

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39 Responses

  1. Paulo says:

    Dear Andrew

    I am a Brazilian living in Brazil.

    First of all, I would like to thank you for sharing so much knowledge with me.

    I love your ideas and would like to apply them with my investments, allocating them in low cost Index Bonds and Index Mutual Local and International Funds.

    We do not have Vanguard in Brazil and I was wondering if you know of any way I could apply your ideas here in my Country.

    Thanks and all the best.


    • Hi Paulo,

      Try to find out whether you can open a trading account in Brazil, with access to U.S. stocks. I’m guessing you can find one. Make sure the commissions are reasonable, no more than 0.5% for each trade. With such an account, you could build a diversified portfolio of global indexes: one for the Brazilian stock market, a second for the global stock market and an international bond index. Here are links to the exchange traded funds you could buy, once you have access to the New York exchange (which I’m sure you could find via a Brazilian based brokerage)

      Brazil: https://www.google.com/finance?cid=700262
      Global stock index: https://www.google.com/finance?cid=700262
      International bond index: http://sg.finance.yahoo.com/q?s=ISHG

      You may even be able to find an exchange traded fund representing the Brazilian stock market on the Brazilian exchange. Then you could buy the latter two indexes off the New York, to round out your complete portfolio.



  2. Paulo says:

    Dear Andrew

    Thank you so much for spending your time and giving me this information. I will check it out and let you know what happened. But since this is coming from my financial advisor, I need to double check it, right?


  3. Lucio says:

    Dear Andrew,

    After being approach by a Zurich financial advisor which I refused thanks to you, I’m now approached by another IFA and he proposed me the Royal Scandia Investment Account. This is different from a saving account since it allows you to chose on which fund to invest, so it seems to be free and easy but of course there are fees:
    – 1.4% of the total amount, waived after 8y
    – $150 USD per quarter (fix whatever amount you have)
    – $23 USD per transaction

    He says they have a very nice interface to manage it all, of course you can only enter with a minimum lump sum amount but then it is no compulsory to add anything else. This is for a long term investment and will also advise me the first funds to chose. If then I don’t use the financial advisor, no other fees, otherwise he will take 1%.

    What do you think about it ? I find it more interesting than Zurich or Friends… but still some fees are there.

    Thanks for your advise.


    • Hi Lucio,

      With financial service firms, you will always be paying fees. The question is, how much should you be paying? Through your Skandia rep, you will be sold a basket of actively managed unit trusts, also known as actively managed funds. These funds will carry hidden costs of roughly 1.75% per year. Then there are other costs on top of those, some of which you have mentioned. Hypothetically, if your sister’s house burns down and you need this money after five years to help her, will you have access to it without penalty? Probably not. And yet, you should. You should NEVER be penalized for taking money out before a pre-determined period. Life can throw us curve balls. Please sign up for my free newsletter to receive my detailed article regarding passive and managed funds, for starters. My book gives an even more detailed account of their differences. Ask your advisor what would happen if you invested $100,000 over 5 years, then wished to remove $80,000. My guess is that you would be penalized. Royal Skandia, so you know, has a reputation for advisors that don’t understand their products and/or make them sound much better than they really are. Have a look at my post here, “Royal Skandia, on the list of Legal Corruption” and read the South China Morning Post article that is linked to it. http://andrewhallam.com/2013/07/royal-skandia-on-the-list-of-legal-corruption/


  4. A Very Foolish Individual says:

    Dear Andrew,

    I am afraid I have also been duped by an IFA. I am an expat and less than a year into a Friends ILAS and have paid in 12,000 GBP. I sense the best thing to do is cancel my standing order and walk away having learned a very expensive lesson. Is this sensible in your opinion? Can it lead to blacklisting or legal action? I feel like such an idiot – I will do all I can to inform others of my experience.

    Best Regards,
    A Very Foolish Individual

    • I’m sorry to hear about your experience. How were you sold this product? Did the rep cold-call you, or were they invited into your workplace? You will need to do the math yourself, to determine whether or not you should sell.

      First, find out what your surrender value would be. This is the amount they will give you back if you close the policy. If it leads to blacklisting, it’s the firm that should get blacklisted, not you. I’m writing a book for expat investors, and if you wouldn’t mind, I would like to get some details from you:

      1. What’s the name of the company that sold you this plan?
      2. What did they promise you?
      3. Where are you currently living?
      4. How many (if any) of your friends have fallen for this?

      Thanks for the help. With it, I’ll have more details for my book, and we’ll be able to limit the damage these guys cause in the future by keeping people away from such schemes.


      • Joseph says:

        Dear Andrew,

        I am one of the many duped by a financial advisor in the GCC. I’m in Oman, he’s in the UAE. I am logging complaints with the regulatory bodies including the Central Bank in UAE. I will make sure no-one touches them or any advisor in the UAE with a barge pole when I’m done with them.

        Feel free to contact me to get all the info. Happy to tell you who, what, why and how no problem.


  5. Karen says:

    Hi Andrew

    I am so glad I came across this website. I am an expat also in Singapore. Actually have a term insurance with zurich not skandia and was thinking of getting a regular savings plan for our kids education on suggestions by my adviser. I thought of zurich as ease of managing all policies together.but am glad I came across your advice here. I was also asking around if there were any recommendations among the insurers especially for expats and was told zurich is not in Singapore anymore which is quite worrying for a customer! Any comments or info you might have on this? I read a few articles online that seems to be so??

    Thank you.


  6. Russell Hammond says:

    All very interesting stuff. What I haven’t seen any mention of here, though, are the options that advisers have at their disposal when investing their clients into products such as the Royal Skandia bonds.

    So, as an example we do not take commission (I mean.. tell me where the logic is in paying someone for a service eight years in advance of that service being delivered??..utter madness) from Skandia, but select their ‘commission free’ charging structure which has a 0.15%-0.2% p.a charge NO eight year exit penalty and then our adviser charge of 1% of which the clients can avail themselves of at ANYTIME if we do not live up to our promises.
    I am honestly not writing this as an advert for our services, more to highlight that these are not necessarily bad products. The problem is that more often than not, the adviser (if that is the correct term to describe a financial product salesman) selling them has his own interests as his primary modus operandi.

    • Thanks for the comment Russell. I’m glad to see you recognize the madness of such products mentioned above.

      When you refer to the Skandia bonds, are these fixed income instruments you’re writing about? As such, wouldn’t it be tough to match inflation if they carried total costs of 1.2% per year, with inflation running about 1.5% per year. To break even, I’m guessing they would need to generate 2.7% per year. True?



  7. Russell Hammond says:

    Hi Andrew, thanks for your message. When I use the term Skandia ‘bonds’ I’m not actually referring to a fixed income asset here, but the wrapper that Skandia make available of which other investments can be housed, or wrapped, within. 99% of advisers use the commission model, we use the commission free model, that Skandia provide – (though of course most clients are unaware that these options are available to advisers).

    Just as you mention fixed interest though, there are plenty of really good fixed income options out there (7.5% fixed – solid UK financial institutions), at the moment, when one takes one’s nose out of the trough of commission paying, costly funds. In fact, where possible (and the above 7.5% is an example), I prefer to have my clients hold the asset directly (with the Skandia wrapper) and cut out the middle man. After all, I need to prove to the client that I am earning my fee by adding value within the investment selection process, in addition to reducing their total expense.

    Other ‘advisers’ will say to me “yeah but if you lose the client, then you lose your fee”. My reply is always, “Yes, and what’s your point?! That is A: the clients prerogative, and B: my incentive to make sure that I am giving the client a wholly client oriented, value added, investment service.’

  8. Russell Hammond says:

    Thanks Andrew, as I say to all of my clients, it has never been, nor will it ever be, the case that everything I touch turns to gold; however, there are particular variables that I CAN control – charges, access, flexibility, diversification and genuine care, to name a few.

    Best regards


  9. Ian says:

    As an expat for the last 3 years I have been contacted by a cold calling financial company who are offering to transfer some stagnant pensions into a UK SIPP. Is there anyone who can you suggest to reviews the financial report provided by them?

  10. Russell Hammond says:

    Hi Ian,

    I’d be happy to review the report provided to you and provide you with my unbiased opinion on its suitability and efficiency.


  11. Lee James says:

    Actually Russell I disagree with what your saying about your no commission bond fees and unbias advice as I recogonise your company logo as the same mob that have been mis selling pension busting schemes and now there are many clients in Spain for expample who have been hung out to dry., note to mention the selling of long term savings plans or the lose of clients money in LM funds!!

    Allow me to email you all some links if you like?

  12. Nick Beazley says:

    I was sold a Royal Skandia Managed Savings Account by an IFA in Dubai. I was paying in $2000 per month whilst earning a tax free salary. Great ! However, when my circumstances changed and I moved back to the UK with dependents I obviously could not afford to carry on paying in $2k per month. So Skandia charge me 7% penalty on the $2k I fail to pay in each month. The scheme runs for 20 years so that fee continues for 20 years unless I cash the Account in, and get charged the equivalent of what the penalty fees would have been. I complained to Royal Skandia, who pointed out that I had signed the forms with all the illustrations etc and I complained to the Isle of Man compensation scheme (Royal Skandia is housed there) who said the same. My Dubai IFA is part owned (as with all companies there) by a local, so I have no recourse there, so I have to take the hit. The FCA in Britain can give me no assistance because its an Isle of Man fund. So I cashed in a fund worth $85,000 for only $50,000 !

    So Royal Skandia facilitate this scandalous scheme. Yes, I signed the forms, I was stupid, but surely what they are doing is negligent, and there should be recourse to their UK regulated big brother Skandia ? I am lucky that I am 35 years old and only lost $30,000. What if I had my entire pension pot with Skandia and was 60 years old ? I would be totally and utterly screwed and the the money I would have worked hard for to enjoy my retirement would be going into the greasy palm of Royal Skandia and their ‘approved’ IFAs. Isnt Skandia a household name in the Pensions industry ??

    I would love to know if I have any recourse here. I feel that at some point in the future, just like the bank PPI scandal there will be a rescue fund and hundreds of claimants will come forward and get their money back from Royal Skandia. The problem I envisage is that Royal Skandia is housed in the Isle of Man, and is regulated by the Isle of Man Ombudsman. The Isle of Man depends on this offshore finance industry and so theres a general willingness to let the major employers get away with things.

    • Charlie says:

      Hi Nick,

      I feel your pain mate, I went through the same thing recently in Dubai. But you did the right thing. My suggestion is to tell people about these ‘scams’. I have saved a few friends from going down the same route. I’m now using a Regulated Financial Advisor in South Africa who charges me a flat 0.5 fee and is helping me build an Index focused Portfolio Offshore.

      Best of luck,

  13. Charlie says:

    Hi, I have similar awful experience in Dubai. Having decided to move my hard earned 28 year final salary pension into a Qrops I didn’t realise that my funds would go straight into a 10yr Skandia fund at 0.95% PA and I’d start incurring fee’s. Admittedly I signed the Skandia forms thinking it was in preparation and for the last 4 months having believed it’s sitting with Sovereign in a holding account not doing anything until I took next steps. Also, and having read threads such as this, I realise there are many more “wrappers” I could have chosen that may have offered more attractive rates and more importantly lower exit fee’s than the punitive charges Skandia make. Any comments on how I should approach my IFA, my aim is to retract the contract with Skandia (now Old Mutual) and look at the wider choices before I start making my conservative investments with an IFA I can trust, if I can find one out here as I’ve been advised UK IFA’s are not permitted by the FCA to advise customers here in the UAE ? Many thanks for any comments or help.

  14. Russell Hammond says:

    Hi Charlie,

    Unfortunately yours is not an unfamiliar tale of woe. How long have you had the QROPS for now?

    I know, somewhat, after the horse has bolted, but I’ve recently written this blog post in an attempt to warn expatriates of everything that has been written above.

  15. Russell Hammond says:

    PS: There are many UK FCA firms and advisers who will work with expats in the UAE.

  16. Charlie says:

    Thanks for these comments. I believe I’ve been misled by my advisor here in Dubai as I didn’t know (nor was advised by him) that there are several types of “wrappers” that I could have moved into which would have no exit penalties. Mine has 9.5% in year 1 going down by 1% per year for 10 years, also comes with a 0.95% annual fee. I would have naturally preferred something much less punitive but wasn’t offered this. In your opinions do I have a case for mi-selling and has anyone heard of coming out of a wrapper in these circumstances without paying any penalties ? I’ve had it for 4 months (didn’t know it had been activated). My plan is to meet with their compliance management as I have no desire to meet the advisor who sold me this nightmare. Comments ? Regards

  17. Russell Hammond says:

    My recommendation would be to meet / submit a complaint with their compliance team. They will have the capability to ‘make good’ as the cost of you cancelling your current contract is, in the main, the commission that they have been paid. Standard commission payable would be 7%, and your exit penalty would be 8% in the case of Royal Skandia. RL360 is higher at 8% commission and circa 10% exit penalty. If you can demonstrate to them that you genuinely hadn’t agreed to the inauguration of the bond, one would hope that they would be reasonable and offer you an alternative solution.

  18. Charlie says:

    Hi Russell, would the FA have to effectively pay back the commission if the contract is surrendered?
    Surely this would not apply to a 25-year plan?

  19. Charlie says:

    Many thanks, I did call the compliance team and was called back by their regional manager who listened to my grievance, made some comments and agreed to meet which I’m going to do early next week. I’ll let you know the outcome. Regards

  20. Russell Hammond says:

    Hi Charlie, if the savings plan were cancelled within the initial period (normally two years) the adviser would pay the commission back depending on how far through the initial period the client was. Eg. month one would = 100% commission paid back (claw back as it is known) month 12 = 50% commission paid back.

  21. Tony says:

    i’ve read half of Andrew’s book and felt the need to check the TER on my Skandia (now Old Mutual International) plans.

    Looks like most funds are 2%, give or take .5%. Not as bad I I imagined, but far above my .25% Vanguard funds.

    I originally had insurance tied to them, but over the last 15 years things have gone well so I dropped the coverage. One plan had me putting in $150 but $50 was going to the life coverage, a lot more than I expected.

    I only dedicate $500/ month total to the plans, and I am glad that is all. One is up 50% over 15 years, the other is 10 years old and pretty much 0% gain (bad fund choices down 40%).

    Although not a huge mistake, I know my US index funds have done MUCH better over the same term.

  22. lucky mike says:

    my tale of woe with Royal Skandia (a CIB) not as bad as others – originally invested 11 years ago with a lump-sum, subsequently followed 2 & 3 years ago with further lump-sums. tried to withdraw the original investment amount which had been in long enough (>8 years) not to incur any withdrawal penalty – Skandia position was that although i’m selling the fund in which the original investment is held, they apply the early withdrawal penalties on a pro-rata basis taking into account the subsequent contributions. this could have been avoided if separate policies had been taken out with the subsequent investments – i’m not in any way recommending Royal Skandia/Old Mutual (just the opposite – they’re crooks), but if anyone is considering making further investments to an existing bond then better to take out a separate bond to ring-fence the original EWDs.

    i didn’t lose too much money on this withdrawal, but have raised a formal complaint with the IoM Financial Ombudsman (http://www.gov.im/oft) which if nothing else will cost RS time and money to deal with.

    however i have another issue – i was sold into the Axiom Legal Financing Fund within my CIB by my now ex FA. this fund is suspended (due to it being a fraudulent Ponzi scheme under criminal investigation), RS are still charging management fees on the fund value, and i can’t close the CIB because it contains a suspended fund. so i’m stuck with a non-performing (and very likely zero value) investment on which RS are charging me qtly management fees and i can’t close the CIB. any suggestions?

    also, am being pushed by HSBC to put money into a platform to allow investing in a range of funds – they are suggesting either the Zurich International Wealth Account or the Pershing platform – these being sold on the basis that they aren’t “insurance” products but are platforms to hold and manage investments in a range of equity and bond funds. the charges are 3% (over 3 years) plus 0.2% annual management fee for Zurich and 3% upfront with no further charges for Pershing. i’m told that investing through these platforms – as opposed to purchasing the underlying funds directly – means there is no entry or exit charge when buying the underlying funds which are often 5% ~ 6% eg the Templeton Asian Growth Fund. which all looks like a good deal so i’m worried about it – whats the catch?

    anyway, appreciate your input.

    • Lucky Mike,

      You mention the fees for the Zurich International account, then ask “what’s the catch?” The bottom line is that you will pay about 4.5% in annual fees, including the internal fund cost expense ratios (which aren’t charged by Zurich, but by the unit trust companies). Here’s what this means. If your money somehow generates an 8% return before all fees, you will make nothing. Inflation and fees will eat the difference. Always remember that good investments aren’t sold. Good investments are bought. If someone is suggesting something at HSBC, you can bet it’s a bad deal. There are some books at the top of my resource page that I think you should read. Good luck. Andrew

      • lucky mike says:

        thx for responding, i’ve also posted on another comment string so apologies for the repetition but…..

        on a $250k investment the Zurich platform quoted annual management charge is 0.35%. added to the underlying fund cost expense (which would apply anyway even if i purchased the fund directly) the annual fee would be 2.5% ~ 3%, but the “additional” cost of going through Zurich is only 0.35%. and i would benefit from the reduction in the underlying fund entry/exit fees – 3% to Zurich versus 5% ~ 6% if purchased directly (plus exit charges) which i’m told won’t apply when bought though Zurich. and HSBC tell me that switching funds is at nil cost ie no further entry/exit fees if/when i switch.

        btw i have read Millionaire Teacher and will also be putting money in low cost index tracking ETFs, probably Vanguard – apparently not accessible though Zurich/Pershing so will be directly. but not all eggs in the one basket.

        anyone reading this who has also unfortunately (stupidly….) invested in Axiom, any responses or suggestions appreciated.

  23. lucky mike says:

    first, response to Russell of AES International – recently contacted by them in Dubai offering to do an assessment and evaluation of my financial situation to provide impartial and commitment free advice – all I had to do was sign and return a PORTFOLIO REVIEW REQUEST FORM identifying all my current policies and investments which had the following instructions at the bottom in small print…..

    I/we confirm AES International is to be my/our servicing agent
    with immediate effect. I/we therefore request you to provide
    them with full servicing rights and any information they need
    regarding these policies. Where renewal commission was being
    paid to my/our previous broker, I/we also agree to any future
    renewal being paid to AES International for servicing my policy.

    happy to forward the actual request form if you’re not aware of it…..

    AES International promotional literature makes a big selling point of the ethical basis of their business model and then try to slip something like this past any unsuspecting respondent. straight to the black list pile I’m afraid.

    Andrew – no response to my previous messages on the actual cost of going through the Zurich IWA platform (through HSBC) being limited to ~ 0.35% more than purchasing the underlying funds directly, 3% IWA platform establishment charge more than offset by deletion of the 5% ~ 6% underlying fund establishment charge and the EWD restricted to 3 years (max of 4.25% in the first year)?

  24. Russell Hammond says:

    Dear Lucky Mike,

    Thank you for your feedback which I have sent to the author who has already changed the wording to give people the peace of mind to know that the offer of a free review is without any form of strings attached. However, please rest assured that renewal commission isnt payable on an offshore insurance bond in any case (this was simply industry standard wording that applies to life or contractual savings accounts). As such – international clients can, for the very first time, see a breakdown of the money paid to the adviser, the platform and the investment company. They can also see their asset allocation versus a UK model and their investment performance against common benchmarks. What you then do with this information is entirely up to you but I suspect the right fee-based planners will probably be able to add substantial value.

  25. Deenah Feras says:

    The worst day of my life is when I walked to the Hilton, Al-Ain, United Arab Emirates and signed a contract with both Royal Skandia and Hansard International. I was paying almost $2000 a month for years but I didn’t ‘cash in’ until I returned to the UK and wanted to make a downpayment on a property. After ten years of savings, I got $90 out of the $100500 I put into RS. However, Hansard International are worse. They said they will only pay $5000 out of the $20000 I paid in, because it is ‘premature’. The end of a very sad story…

  26. Winebar says:

    Hi Andrew & fellow investors. I’ve found this blog insightful to say the least. As a resident in Spain I’m signed up to Royal Skandia & Zurich Insurance with a “pensions” and a savings investment vehicle. I now get the advice about where to invest, and just insuring with insurers. The cumulative fees are truly scandalous it seems and although I struggle to identify these, it does explain a pitiful performance. Is there an effective way to get the provider to provide visibility here?
    Also the penalties are excessive vs what I’ve found to be beautifully simple, flexible funds bought locally (I use ING), but they offer have low commissions, are tax efficient, & seem to have performed well to boot. The former funds not being compliant, and my “pension” simply not being pension has resulted in complex and very costly declarations and fines, virtually eliminating the net fund value.
    The upshot is that there ought to be a strong a miss-selling case against my IFA & Old Mutual. Any ideas who carries the ultimate responsibility for this? What track record exists for success in getting IFA’s (or the Insurers) accountable for miss-selling, and what is the most effective route to pursue?
    I’d really appreciate an update from lucky mike on whether the IoM Financial Ombudsman had any teeth, as surely a lack of action on their part simply undermines confidence in anyone investing there?

    • lucky mike says:

      been out of touch for a while, but just to answer the last query on whether I got any joy out of the IoM Financial Ombudsman from my complaint about Old Mutual – no, they evaluated the complaint, contacted OM and the result was that the penalties were in accordance with the small print so not upheld.

      which was as expected but hopefully the Ombudsman at least records the number of complaints against OM.

  27. Michael Fitzpatrick says:

    At present I have three pension schemes in the UK and am a resident of Australia. If i try to transfer the Pension schemes i will be charged 55% UK tax. If i leave the schemes in the uk and if anything happens to me (i.e. dying) the UK government gets it all. I was ‘cold’ contacted by a member of GlobalEye saying that they could help me via Qrops to transfer my schemes into Gibraltar into “the Calpe Retirement Benefit Scheme” Which in turn is run by the ‘Sovereign Group’. I took note that within the structure notes it says “Investements may be made into a range of product wrappers and funds offered by Royal Skandia or Royal London 360”. I was advised by the GlobalEye rep that I can transfer via Qrops without having to pay 55% UK tax and can also leave any moneys to my beneficiaries when i shake off this mortal coil. Having read the trail of events of others above I have become somewhat suspicious. Is there an alternative that you could advise me of

    • Hi Michael,

      This sounds messy. You may want to contact Ben Sherwood, Principal, Hillier Hopkins LLP, Chartered Accountants and Tax Advisors, UK. I don’t know if he will be able to lend you a hand (he’s a bright man, who deals mostly with very wealthy British expatriates) but I am certain that he has answers to the questions you pose. Be really polite. He may give you some advice. http://www.hillierhopkins.co.uk/get-in-touch/london

  28. Per Bjorkdahl says:

    Hi Andrew.
    Back in 1996 I lived a few years in Singapore as an expat and was of course contacted by an “agent” selling me some “offshore accounts” Knowing very little about this I did sign up for two different, one of them being Royal Skandia! Now 20 years later the other one is being liquidated and the money paid out but I have no clue of what happened to the one with RS! Does anyone with a better insight than I have some information and perhaps advice for me? I know it is now Old Mutual!
    Best regards

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