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Should I avoid offshore investment bonds?

I've read that offshore investment bonds should be avoided because they are mis-sold by financial advisers looking to earn commission from my investments. Should I avoid offshore investment bonds?

Should I avoid offshore investment bonds?

Offshore investment bonds are complex products that are normally only available to sophisticated investors. However, regular investors are able to use them for investments by going through financial advisers and wealth managers.

However, in recent years, offshore investment bonds have been misused by offshore financial advisers seeking to make money through commission payments from the bond provider. Unlike financial products and investments in the UK, the FCA does not have jurisdiction over the selling practices of offshore financial advisers outside of the UK and therefore FCA rules do not apply.

Unfortunately, this has meant that investors have been mis-sold offshore investment bonds by advisers seeking to hide fees and commissions within the legitimate fees, and often masquerade the advice as “free”.

Other techniques which has caused significant issues for expat investors is the failure of the financial adviser to fully disclose information about the underlying investments before the client signs the agreement.

As a result, offshore investment bonds automatically attract negative opinions of investors, financial advisers and journalists, causing a legitimate investment product to be treated with extreme caution.

While offshore investment bonds are not suitable for all investors, providing the adviser receives no commission; all fees and charges are clearly explained up front; and all underlying investments are fully detailed, offshore bonds can offer tax efficient opportunities to grow capital for expats with lump sum capital to invest.

For more detailed information about offshore investment bonds, read our detailed offshore investment bond guide written specifically for British expats and UK non-residents.

INVESTOR WARNING: This answer does not constitute advice and you must always seek financial advice when making decisions about your financial matters. If you are ever unsure about any investment, you should never sign any agreement or hand over any money.

Last updated: 3 May 2019