Why does the UAE not make cold calls by financial consultants illegal?
Posted on 13 September 2010 with 4 comments from readers
Financial services firms are not allowed to make cold calls soliciting business in the UK, why does the UAE still permit this? Surely the emirates wants to present itself as a world class location for financial services, not a place where unregulated companies can provide advice to the unwary.
Most residents in the UAE will have had calls from these companies on a regular basis. They never seem to take any notice of repeated requests not to phone again, and they seldom if ever seem to have any recollection of previous calls.
Trusting a stranger with your money
Would anybody in their right mind ever do business, let alone entrust personal financial information to somebody who had effectively just met them in the street? Of course, it never looks quite that bad when you visit the swanky offices in a better part of town. That expensive image will be paid from commissions.
The company may be quite above board in that it pays your money into investment products with a well known, blue-chip third party. But they will not be doing this for free.
The friendly voice at the end of the phone has to endure legions of hostile expatriates who resent being bothered by such people at anytime of day or night.They have to be be recompensed by a commission on the few calls that are successful.
This is a monstrous invasion of privacy. The first thing to ask is where they got your phone number? Somebody must be selling these lists. The whole business model should just be illegal as it is in the UK or Europe.
The commission structures of these investment agents are very artful and hard to fathom. But professionals who know say there is always more in it for the agent than you might assume or they would admit. Your free advice can actually cost you a great deal of money.
Confidence trick
This is not stealing. It is a kind of confidence trick. You place your confidence in the financial judgment of somebody you met over the telephone in an unsolicited call, and face the consequences. The CEO of one Dubai financial services company says all you need to be seen as a financial expert is shiny shoes.
Usually the full cost will not become apparent for many years. For these agents generally sell long-term savings plans and insurance policies whose terms and conditions will string you along for a very long time before you are ultimately disappointed by the result.
This is nothing new. UAE expatriates field these calls on a regular basis. Some put the phone down, others hurl abuse. Others must be taken in. But the wonder is that this is still allowed after all these years. Other jurisdictions get a better name by banning them.
4 Comments posted by readers:
As an professionally qualified, experienced & ethical Independent Financial Adviser who has never made a cold call, I agree with much of the sentiments in the above article, but it is unfair to assume we are all the same. Until the day comes that proper regulation in enforced in the UAE, the shiny suited salesperson will prevail.
Before trusting anyone, people should ask some questions. Is the ‘adviser’ properly qualified? Are they experienced? Are they offering fully-rounded advice, or just selling an unsuitable 25 year savings plan? Do they offer an option of commissions or fees to pay for their advice? And of course, why would a good adviser need to cold-call to get clients?
Certainly receiving these unwanted calls is annoying, although they ony ever call me the once, but I would suggest that the bigger issue is regarding unethical companies that operate in the UAE with little regard for the long-term well being of their clients.
To satisfy my conscience I agreed to meet a Financial Advisor from a well-known UAE company that had continued with the cold calls after being told many times that I had no interest in their “advice.”
The slick, confident young advisor arrived at my office in January 2008 with the announcement that he had just purchased a stunning villa on the Jumeirah Golf Estates at an absolute “no-brainer” price. “Fantastic”, I replied, “are they finally waking up and discounting the prices,” I continued. “You must be joking sir. These villas are like gold-dust! I managed to purchase a 5-bedroom at a reduced premium of 40% on launch price.” “Even if we don’t have any financial products to interest you, take it from me, these villas will double in value before handover.” Only these financial geniuses could get it so wrong!
Keren, I must say that I am not fooled by your whiter than white approach. With little research it can be established that your firm hire people to cold call for them. They have even set up a seperate company that partakes in this activity in order to preserve your company name. Are you saying that you disagree with the approach of your own company? Or when you say you have never cold called, do you mean personally but have employed someone else to do it for you?
As we are all aware, regulation in the UAE is not strict. So by what definition is an advisor qualified? I would suggest that even being qualified in th UK does not qualify someone to advise all nationalities in the offshore market. By posting your comments on these forums all you achieve is to rubbish your own industry. Well done
Touche Jamie on your comment about Keren or anyone else that says cold calling is not appropriate and unprofessional. I’ve been in the Financial industry 29 years and cold calling is one way to learn get to meet people to provide your expertise and see if the relationship could be a match. There are many ways to attract new business but to say that cold calling is dead is a big mistake. Granted, the phone has been overused to solicit business but nobody says you have to take it any further than just hanging up the phone! i would dare guess that Keren is not one of the top producers in her firm and until the fear of cold calling is overcome, she is missing out on developing new relationships which very well might deserve her services. What a pity…
Ed Note: Not sure if you live in the UAE where this practice is out-of-hand – it would help to restore the status of the sector to stop this.