SC: Use only licensed financial planners

PETALING JAYA: The Securities Commission (SC) has alerted the public about firms and individuals that promote financial planning services without being licensed by the commission.

“It is essential that investors are advised by licensed professionals who are able to provide an unbiased plan that serves the best interest of their clients,” it said in a statement yesterday.

“Such firms and individuals may present their qualifications, awards or membership in certain associations as credentials.

“However, only financial planning companies and their representatives who are licensed by the SC are permitted to carry the title ‘financial planner’ and offer financial planning services,” the SC added.

Some get-rich-quick schemes, including “foreign exchange” (forex) trading, have been on the rise recently.

These forex schemes are run by dubious firms offering high, guaranteed returns that range from 110% per annum to 250% per annum – staggering figures that cannot be matched by the world’s best hedge fund managers.

The modus operandi are the same – the company that eventually receives the money is based outside the country, while the intermediaries are usually locals.

A forex trading scheme refers to the buying or selling of foreign currency by an individual or company in Malaysia with any person who is not a licensed onshore bank, or who has not obtained the approval of the central bank, subject to the Financial Services Act 2013 or Islamic Financial Services Act 2013.

“This scheme involves the act of buying or borrowing foreign currencies from or selling or lending foreign currencies to a non-licensed onshore bank,” according to Bank Negara.

On its website, it said these illegal operators usually operate on a small scale and claim they can provide remittance services efficiently, without the need for any documents or identification.

They rarely use documents to validate and verify the transactions. By engaging in these transactions, customers run the risk of being cheated and their funds may never reach their intended destination.

According to the central bank, licensed onshore banks that can conduct foreign currency trading in Malaysia are commercial banks, Islamic banks, investment banks and international Islamic banks.

A well documented get-rich-quick schemes is the Genneva Gold scheme, which was scrutinised by Bank Negara in 2011 following complaints of dubious gold trading.

According to a statement on Bank Negara’s website regarding the Genneva Gold scheme, initial forensic accounting had uncovered considerable losses being experienced by the company in 2012, and that the company had liabilities exceeding 10 times its assets – which would put the figure at around RM1bil.