FSA under fire from Imperial investors
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Your support makes all the difference.UK investors in Imperial Consolidated have attacked the Financial Services Authority for failing to warn them of the risks of investing in the collapsed firm's offshore funds.
The UK part of the finance company was put into voluntary administration after the remaining director was advised that the UK companies were insolvent. Investors are facing losses of up to £200m.
Although Imperial was not regulated by the FSA, inves- tors say it should have used its powers to warn of the risks of investing with the company.
Conservative MP Howard Flight said he would be "very unhappy" if the FSA had " not discharged its duties" to look into Imperial's activities.
One investor, Bill Hershaw, said: "If I'd had a hint of a prob- lem over Imperial from the FSA I would not have invested." Mr Hershaw was advised to invest in Imperial funds by the offshore broker Britex International while he was working in Singapore. "I've emailed the FSA twice in the last two weeks asking what steps I should take about Imperial. I have not had a reply."
The Independent on Sunday raised the case of Imperial with the FSA 18 months ago but was told: "We do not discuss individual companies." Last week the FSA restated this position.
In May, Allied Dunbar International, which has clients who invested in Imperial, also approached the FSA with concerns about the group.
Paul Austin, based in Dubai, has a "substantial" investment in an Imperial offshore fund. He said: "This was most of our savings as expatriate workers. I'm a working-class boy from Manchester made good. The loss has devastated the family. My wife is ill with worry.
"I invested after a British financial adviser here approached me. He convinced me to invest in an Imperial Consolidated offshore fund delivering a return of 12.5 per cent a year. I have written assurances that the investment was guaranteed and insured."
Like other investors he was informed by letter in May that the fund had suspended payments.
Mr Austin says that had the FSA issued any kind of warning over Imperial then he would not have touched the product.
Offering offshore products in the Caribbean, although UK based, Imperial was not required to register with the FSA and was not subject to its regulation.
What concerns Mr Flight, the shadow paymaster general, is whether the FSA failed to use its wider powers to inspect Imperial's marketing and products. "When the Financial Services and Marketing Act was being passed, we very clearly extended the powers of the FSA to monitor non-authorised products. These powers work on 'Bank Of England principles', enabling the FSA to gather intelligence and act on companies who they may not regulate but whose conduct is of possible concern.
"I would want to know if the FSA used those powers in this case."
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