5th August 2010

Judicare: growing numbers of IFAs seek help with problematic investments abroad

Interviewed by Will Roberts for IFAonline's 'Professional Adviser', Judicare's CEO Neil Heaney says that the number of IFAs facing issues with overseas property investments has soared over the last few years as developments have run into trouble in the wake of the credit crunch, depressed property values and recession in much of the developed world.

"Much of the concern stems from late or non-delivery of property or even project cancellation, and IFAs are asking for our help in increasing numbers week by week as client investments turn sour."

Heaney attributes much of this to developers over-extending themselves during the credit crisis and subsequent knock-on effects. Judicare has seen a number of consequences, with developers running out of the funds needed to build or to obtain suitable licenses. In some cases he adds, developers have disappeared with funds. It's also a common occurrence for bank guarantees to be missing - usually when lawyers organised for clients by the developers themselves abdicate responsibility for the requisite safeguards.

Speaking to Professional Advisor, Heaney recounts that the problem is particularly acute in emerging market economies such as Dubai and Bulgaria although other regions traditionally targeted by UK investors including Spain and Portugal continue to cause concern.

Judicare's caseload indicates that IFAs have been frustrated by language barriers, by subtle and not so subtle variations in the legal and statutory framework in jurisdictions overseas, and by an absence of feedback from developers. As a result, IFAs are unable to provide investment updates for clients, and consequently feel vulnerable and under pressure themselves. The problem is often exacerbated by not knowing exactly whom to approach for advice.

Whilst the majority of overseas investment contracts are set up with delivery dates and penalty clauses allowing for the return of funds if those agreements are breached, a significant minority lack such protection. But, Heaney says, other than a couple of high-profile cases, fraud is relatively rare.

Heaney stresses that if there is any "blame" at all to attach to IFAs in the cases Judicare has handled to date, it has only been in waiting until the situation is acute before calling in the experts. In his experience, the advice of IFAs has always been delivered to the client with the best of intentions; while individual advisers may be concerned initially about being implicated, in 100% of cases to date it has been clear after a fairly cursory assessment of the case that culpability lies elsewhere. He urges IFAs to act as soon as there is a perceived problem.

Judicare has experts on the ground locally around the world and can resolve the issues that IFAs are typically grappling with on behalf of their clients.

For the full article visit
http://www.ifaonline.co.uk/professional-adviser/news/1726613/ifas-hit-overseas-property-failures