New data reveals which professions are most likely to be caught out by unregulated investments.
New data from claims firm Rebus has revealed which professions are most likely to to be fooled by unregulated investments.
Banking professionals make up 36% of the estimated 114,000 victims of sales of unregulated investments in the UK this year.
The second biggest group are Managers, Directors and Consultants (10%) followed by Entrepreneurs (6%). Surprisingly, 5% were legal professionals.
|
Profession |
Percentage of mis-selling victims |
|
Banking |
36% |
|
Manager/Director/Consultant |
20% |
|
Other |
14% |
|
Dentist |
10% |
|
Entrepreneur |
6% |
|
Doctor |
5% |
|
Lawyer |
5% |
|
Sportsman |
4% |
Source: Rebus
The problems with UCIS
Promotion of unregulated collective investment schemes (UCIS) to ordinary investors was banned last year. However, they can be proposed to 'sophisticated' investors (read: experienced and knowledgeable) investors and certified high net worth investors.
[SPOTLIGHT]A UCIS can cover all sorts of different things, from something relatively safe-sounding like property, to far more exotic investments like stamps, wine, part-used life insurance policies and carbon credits.
Just because an investment is unregulated does not automatically mean that it is a scam. However, unregulated investments by their very nature are risky, and you will have no protection from the regulators if something goes horribly wrong. Because there is no regulation, there are no rules about how these investments have to be run or what rights individual investors have.
According to the financial regulators, a whopping 90% of investors with investments in UCIS should never have been shown these types of scheme by their adviser, while 70% were declared as mis-sold.
Why are these professions targeted?
In short, they have more disposable income. "As most of these schemes have some form of tax mitigation or deferral element, those with high income are an obvious target," explained Simon Owen from Rebus.
They’re also more likely to be business owners, particularly in the case of dentists managing their own practices. This group was often the best placed to get the immediate 'benefits' the schemes claim to offer, making them easy to sell.
Focus on footballers
Around 4% of those who are duped are sportsmen, with footballers being a key target. Figures from Rebus show that three out of five footballers will suffer financial hardship or declare bankruptcy within five years of retirement. Much of this is because of poor financial advice during their careers.
The claims firm estimates that players have put well over £1 billion into UCIS over the last 15 years. At present, it is helping around 35 current and former players seek redress.
Have you ever been targeted by a UCIS? Let us know in the comments below.
More on investments:
Beginner's guide to buying and selling shares
Beginner's guide to investment trusts
Financial planning and financial advice explained