It started with a referral from a friend. For Connie Choi Shuk-mei, it ended in claims of fraud, a police investigation and the founding of Hong Kong's first anti-insurance-product activist group.
A client of AXA Swiss Privilege, Choi invested in an investment-linked assurance scheme (ILAS) and is now leading a campaign to ban the controversial product from Hong Kong after finding several like-minded individuals via media reports and the internet.
Typically, an ILAS allows an investor to enrol in a long-term savings plan, pay a regular premium and choose between a range of funds to invest in.
Such schemes have emerged as a lucrative instrument for banks and financial advisers. But buyers have become increasingly concerned about high fees, poor performance and misselling. Much of the concern centres on the fact that agents are typically paid a fee upfront for products that tie in investors for many years.
Choi, the managing director of Hong Kong-based Yee Cheong Pharmaceutical, which sells nutritional supplements, has opened several investment accounts with Swiss Privilege, a division of AXA Group.
Initially, she was very happy with their service. "I have a good memory of Swiss Privilege. A lot of golf events, fine dining, luxurious overseas travel, birthday celebrations at Mission Hills golf courses while the World Cup was going on," she says. "But when a problem appeared, there was no more Swiss Privilege, only AXA, which looks like a witch."
Choi claims her broker doctored the application forms by modifying a previously agreed payment structure and by forging a number of supporting documents. In late 2010, her agent recommended she take out an AXA Privilege Personal Portfolio policy. The agent no longer works for Swiss Privilege and has not returned phone calls and messages from the South China Morning Post.
Choi, 59, said she agreed to purchase a single, lump-sum policy worth US$51,000, to be invested into a range of mutual funds. Rather than fund the policy from her savings, the broker suggested Choi borrow the money against an existing policy she held at Swiss Privilege at an interest rate of 2.5 per cent.
At the time, that policy contained US$112,760.
Choi signed a blank account-opening document and handed it to the agent to complete.
Choi says that, at the recommendation of her broker, she also signed a series of blank forms, which she says she was told were switching forms so her money could be moved between different mutual funds later without her having to come back to the Swiss Privilege office to sign again. It was a decision she would later regret.
All seemed well until earlier this year when Choi broke her leg on holiday in Thailand. While recuperating from an operation, a friend and business partner suggested she move her accounts to Sun Hung Kai Financial where he had an account and was happy with the service.
After instructing Sun Hung Kai to analyse her accounts, Choi said she was shocked to hear they had lost about 50 per cent of their value.
Upon asking for a meeting with representatives of Swiss Privilege, she was presented with documents detailing her account activities. The documents have been shared with the Post.
Choi discovered that the account she had intended to invest US$51,000 into had been set up as a regular savings account with a monthly premium of US$8,500.
The US$51,000 she had borrowed covered only the first six months of premium payments. After that, additional loans were taken out at bi-monthly intervals to cover the ongoing premiums, with her original policy used as collateral.
At various times, money was taken out of her original policy and added to the second one.
The loan documents also indicate that starting in late 2011 money was flowing the other way, with money taken from her second policy to cover loan repayments from the first.
"How could a normal person agree to do this," Choi says in exasperation of the transfers.
After studying the loan transfer forms, she realised that they were the blank forms she had given to the broker, believing they would be used to move money between mutual funds within the one account.
In the 21/2 years between the establishment of her new account in late 2010 and her investigation earlier this year, Choi says she never received any correspondence from AXA or Swiss Privilege in relation to the loans or status of her account and was ignorant as to what was going on. She says all communication was handled by the agent.
Making a play on AXA's "redefining standards" marketing slogan, Choi says: "Redefining standard means not following standards. They do not follow the regulatory requirements, no proper sales procedure, no underwriting, no supervision and no management."
Citing the police investigation, AXA declined to comment on the actions of its consultant or on its oversight and operating procedures.
Included in the trove of documents collected from Swiss Privilege was the form Choi filled in where she first opened the account - the form Choi signed when blank and handed to her agent to fill in.
It lists Choi as the owner of two properties, one in Happy Valley and one in Shenzhen Mission Hills, and having an annual salary of HK$11.7 million. Choi says she rented her home and that her actual salary was less than one-tenth of the sum quoted.
Based on Choi's accusations, the broker may have needed to show a substantially higher salary to demonstrate that she could afford a policy costing US$102,000 in annual premiums.
Submitted alongside the application were two proof-of-address documents. Choi denies they are hers and says she was never asked to provide proof of address.
One is a letter from Banyan Tree Spa in Bangkok welcoming her to its worldwide membership programme. The Post confirmed with Banyan Tree that Choi has never been a member and the letter was never sent.
The second document is a management fee payment advice notice from Guardian Property Management for a car parking space in the Peninsula Centre in Tsim Sha Tsui. However, a search of the land registry shows that Choi has never owned the parking space and she denies ever renting it.
In both documents, Choi's name and address are out of alignment and in a different font from the bulk of the text.
Based on what she found, Choi complained to the police. Police confirmed that an investigation into the use of fraudulent documents was taking place, but said no arrests had been made.
Choi remains in discussions with AXA and Swiss Privilege about the state of her policies. It is not clear what the value of her accounts is.
A document dated May 20 appears to state that she owed US$29,505.61 in penalties, loan repayments and interest.
AXA has allowed her to surrender her two accounts and returned US$53,401.98; less than 40 per cent of the value of her single account in 2010.
Exasperated, Choi is seeking legal advice. "There is not even an apology. They just keep blinding themselves as if nothing had happened."
THE BROKER'S CUT
How much commission is your plan generating? For a regular contribution to an ILAS savings plan multiply the monthly or annual premium by the number of years the policy is taken out for by the commission payout of 4.2 per cent.
For example, a 20-year policy with a monthly premium of HK$10,000 would generate gross commission of 20 x 12 (months in the year) x 10,000 x 4.2 per cent. This equates to HK$100,800.
The lump sum portfolio bond commission is usually 6 to 8 per cent of the total amount invested. So an investment of HK$1 million would generate HK$60,000 to HK$80,000 in commission. Commission is split between the broker and his or her employer.