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WARNING: Unregulated Investment Products

We have received a number of reports of SME owners being approached to invest in unregulated investment products. As banks are now enforcing negative interest rates, and as charges on many pension funds have eaten into any real investment returns, some small investors are being offered financial products with very attractive, but questionable, rates of return.

The recent entry into administration of the German Property Group in the UK has had a knock-on effect here, with Irish investors awaiting news of their investments in Dolphin Capital Case.

ISME is aware of brokers being offered commissions of up to 21% on certain unregulated investment products, which can take the form of syndicated property or loan funds (among others). Small business owners are prime targets for the vendors of these products, as most lack pension coverage. If you are approached by a broker or other entity to invest in a non-standard investment product, please ensure that you take the following basic steps:

  1. Ask your broker to confirm in writing that the offered product is a financial product regulated by the Central Bank of Ireland.
  2. Ask your broker to confirm in writing that the product is covered by the Investor Compensation Scheme.
  3. Ask your broker to confirm in writing that his/her firm maintains professional indemnity cover for this product.
  4. Take the advice of a suitably qualified accountant or solicitor before signing any contract for such a product.

Remember, if you invest your money in an unregulated investment product, you could lose some or all of it, and have no recourse afterwards. If you ever succeed in recovering money, it could cost you a great deal in legal fees to do so. Therefore, please ensure you carry out your own due diligence before investing.