British consumers are not sufficiently protected against dodgy financial advisers pretending to be regulated, according to a firm that specialises in advising wealthy British expatriates.

AES believes that 'passporting' laws are a threat to unwitting consumers who believe that they are dealing with firms that are authorised in the UK but are actually only regulated in less tightly controlled parts of the EU.

Under 'passporting' rules, such companies are free to travel into the UK and sell products. However, their customers (unlike the customers of companies regulated by the UK's Financial Conduct Authority) cannot complain to the Financial Ombudsman Service when anything goes wrong.

Sam Instone, the chief executive of AES International, said: “I have seen innumerable examples of European Economic Area firms passporting into the UK with large numbers of trading styles or appointed representatives who can easily bypass all the regulatory controls for consumer protection.

“While the FCA do have a disclaimer on their register stating that these firms may only be subject to limited regulation and that clients should ask the firm about its complaints and compensation procedures, the normal retail client would find it almost impossible to find or decipher."

Further complicating the issue, Instone added that if a consumer were to check the FCA register, the freedom-of-services firm would be present and the consumer would therefore be unlikely to browse further to find the disclaimers.

“The terminology and procedures in European passporting aren’t easy for a client to understand and these EEA companies operating through a dubious mist of complexity are a time bomb waiting to go off,” he concluded.