THE Securities and Futures Commission (SFC), the territory's chief financial watchdog, last week warned investors to check their policy documents carefully before buying financial products. It follows the reprimand of Collingwood Investment, a financial adviser, for failing to alert many of its investors to the terms and conditions of investment-linked insurance policies. Both the company and its former director, Grant Wettle, were criticised for failing to advise potential clients clearly and accurately. The punishment would have been more severe had the company not reviewed dozens of policies sold to investors and co-operated with the regulators during the 10-month investigation. Deborah Glass, director of investment products for the SFC, said: 'Investors should ensure that they fully understand the terms and conditions of the policy they are being offered and that it is suitable for their current and long-term requirements.' The 10-month SFC investigation into Collingwood Investment followed several complaints from investors. The investors said that they had been sold investment-linked insurance policies with terms ranging from 10 to 25 years. The policies had high start-up costs because the advisers' commission payment and the policies' establishment charges are usually taken from the first three years' premiums. Those that withdrew their funds before maturity faced stiff early surrender penalties. Other investors could easily fall into the same trap with the same costly consequences. Last week the Life Insurance Council introduced cooling-off notices which provide investors with a chance to rethink their purchase up to three weeks after signing for a policy. The council is finalising guidelines for illustrations which will show investors how much they will lose from early encashment. Ms Glass said: 'Investors are also advised not to rely on oral representations when assessing a policy without first carefully comparing these with the terms of the policy they are being sold.' Generally, if the return sounds too good to be true then it probably is. 'People often tell us that an adviser told them that the policy had flexible withdrawal terms. But if they had checked the policy documents they would have found otherwise. 'The onus of responsibility is on the investor to make sure of all the terms if they are given the brochure or policy documents.' Ms Glass said problems often arise two or three years after the policy has been sold. 'It is often when they plan to leave Hong Kong or if their financial circumstances change that they want to cash out and find that the policy is not worth what they thought it was going to be.'