NFIB to Combat Investment Fraud

  

A new self-regulatory body that is set to transform the growing wine investment industry has received an endorsement of its mission to eliminate wine fraud from the National Fraud Intelligence Bureau.

The National Fraud Intelligence Bureau (NFIB) is operated by the City of London Police to combat fraud of all kinds in the UK. It believes that wine investment scams are likely to dramatically increase in 2013 in response to news reports of market growth of up to 14%, with fraudsters using high pressure selling tactics from boiler rooms, web trawling and other techniques. The Bureau acknowledges that self-regulated trade bodies such as the WIA provide a major plank in investor protection by offering investors the means of easily identifying companies that subscribe to best practice.

The WIA has been formed by leading figures from the fine wine investment industry and aims to support the sector’s growth through regulation, establishing best practice and setting up processes to help identify fraudulent activity.

Following an extensive consultation period, the WIA has set out the standards and procedures to which its members must comply.  Member companies will be required to operate robust systems and controls to prevent fraud and perform highly ethical practices across all areas of their business.

The fine wine investment market is currently valued at US$4 billion globally and historically the sector has enjoyed strong long-term growth performance.  Yet, every year millions of pounds are invested by individuals and organisations in what, until now, has been an unregulated market.

In recent times there has been a steady increase in cases of wine investment fraud, malpractice and misrepresentation, where people are duped into buying wines or vineyards that bear little resemblance to what they see in the prospectus, or may not even exist.

The WIA’s approach of tackling this criminality via a robust regulatory framework for industry members with key input from an external auditor is supported by the NFIB.

Director of the NFIB, Det Supt Dave Clark, said: “Fraudsters will always follow the money, wine investment is just the latest in a long line of investment opportunities that are being exploited and corrupted to the detriment of the industry as a whole.

“The NFIB see an auditable framework of self regulation as a real and positive step towards maintaining and increasing consumer confidence and assisting us to highlight those who do not operate to such high standards.”

Hugo Rose, Chairman of the WIA, said: “The WIA will really hold the industry to account and set the highest possible standards for best practice, while giving investors the confidence that, if a firm has a WIA kitemark, they are investing their money with a truly reputable business.

“To secure the endorsement of the NFIB is a further sign of how significant the WIA will be to the future of fine wine investment and we’re committed to a long-term and proactive engagement that will eradicate fraud from our industry once and for all.”

Once a member, a company will be entitled to use the WIA logo, a stamp of approval to promote the fact they are a safe and trustworthy organisation.  The WIA will also engage independent financial compliance professionals and lawyers to adjudicate on complaints and other potential breaches of the WIA’s Code of Practice.

All member firms will be audited by Mazars, which has been appointed as an independent professional advisor.  Vin-X, formed in 2010 and a Founder of the Association, is the first company to submit to the audit process.

Other member firms include Culver Street, Provenance Fine Wines and Albany Portfolio Management.  For more information please visit www.wineinvestmentassociation.org.