In letters sent to cabinet ministers Michael McDowell and Micheal Martin last week, the Irish Association of Investment Managers called for property promoters to be licensed and subjected to the same advertising standards as other parts of the financial services industry. McDowell is the minister responsible for law reform while Martin is in charge of consumer protection.

IAIM members, including Irish Life and Bank of Ireland Asset Management, manage close to 30bn in savings and investments, and are tightly policed by the Financial Regulator. But the government financial watchdog has no powers to regulate overseas property investment offers, despite the millions of euro that Irish people have poured into developments in the Mediterranean, eastern Europe and farther afield in recent years.

"We're concerned that, with the SSIAs about to mature, people are being inveigled into buying overseas by promises of extraordinary rates of return that are purported to be guaranteed, " said one source close to the IAIM. "The overseas property industry is not regulated by any entity and routinely makes fantastical claims about 50% capital appreciation and guaranteed rents. In many cases these rents do nothing more than give you back your own money, which you overpaid in the first place."

Nobody knows how many Irish people have bought abroad, although investment in countries such as Spain is so significant that the Revenue is investigating the extent to which property in the country was financed with 'hot' money from Ireland.

Senior figures in the financial services have warned for some time that the lack of regulation has left overseas property buyers exposed to abuse.

"Some of the stuff that's being sold is an accident waiting to happen, " said David Went, chief executive of Irish Life & Permanent. "You can't turn on the radio these days without hearing ads for apartments in Shanghai that won't be finished for another two years."

He denied that Irish Life and other fund managers are suffering because of the flight of money into offshore property, adding that the group's lump sum investment business jumped by 29% last year.

"We're not into offering people apartments in Shanghai or condominiums in Chicago, " he said. "It's horses for courses but this is not our business. However, we do point out to people that this stuff is not regulated and that there are obvious risks. But I suppose nothing will be done until something goes wrong."

If this happens, Went predicted that the Financial Regulator will be in the firing line, even though it has no power to police the way that property is sold.

"You've got to feel sorry for the regulator because it has no powers in this area, " he said. "But you can be sure that everybody will round on it if some property developer runs off with people's deposits."