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Guide to FSA Ucis Ban Implications

Published by FTAdviser | Nov 29, 2012

In its August consultation paper 12/19, the FSA effectively said that advisers can no longer recommend unregistered collective investment schemes (Ucis) to ordinary retail investors, meaning they can only be marketed to wealthier, sophisticated investors.

As well as possible implications for Sipps providers, products such as more complex Enterprise Investment Schemes and Venture Capital Trust schemes may be covered under the scope of these rules, with the regulatory net thrown over a wider number of “non-mainstream pooled investments”.

So, what schemes come under the Ucis umbrella, should advisers avoid these products altogether (particularly with independence requirements under RDR), what should be done about existing Ucis investors, and what can advisers now recommend and to whom?

Answers provided by Judith Wright, compliance consultant at the Consulting Consortium, and Daniel Tunkel, financial regulation and funds partner at Howard Kennedy.

  1. Q: What are unregulated collective investment schemes?

    Ucis are collective investment schemes which are not authorised and regulated in the UK but can still be sold here.

  2. Q: What schemes fall under the current definition of Ucis?

    The variety of investments that come under the Ucis definition is wide and there are regulatory changes afoot.

  3. Q: When can you recommend investing in Ucis?

    Promotion of Ucis to the general public in the UK is prohibited by statute and the exceptions are stringent.

  4. Q: What is the current regulatory environment?

    The FSA published its 12/19 consultation paper in August proposing to ban the promotion of Ucis and close substitutes to ordinary retail investors.

  5. Q: How would the pending regulation affect Ucis advice?

    The FSA’s consultation paper proposes restrictions on who you advise and on certain products.

  6. Q: What should I do about clients already invested in Ucis?

    In light of the anticipated regulatory adjustments, advisers may be concerned about clients who are existing Ucis investors.

  7. Q: Are my clients protected by the FSCS or Fos?

    The scheme itself is unlikely to be protected, although the operator might be at fault and be liable to the financial ombudsman.

Finished reading this article? Bank 1hr Structured CPD below.

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Q1.  Which ‘close substitutes’ are also covered by the FSA’s Ucis ban?

*Please select an answer

Q2.  According to Ms Wright, what are the most common exemptions to the Ucis ban for retail investors?

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Q3.  What does Mr Tunkel suggest might be an unintended consequence of the Ucis retail ban?

*Please select an answer

Q4.  Which product type does Mr Tunkel state could be included in the ban due to the FSA omitting it from its exemptions?

*Please select an answer

Q5.  What does Ms Wright advise that IFAs should do in relation to historical sales to retail investors?

*Please select an answer

Q6.  Where can clients complain to get compensation if an overseas Ucis fails

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