Since the Retail Distribution Review requirements came into force IFAs should have a basic understanding of EIS in order to fulfil their whole of market obligations.
For advisers of high net worth and sophisticated investors, Daniel Kiernan, director of alternative investment research provider Intelligent Partnership, says EIS could be an excellent addition to their tool kit and be useful for efficient tax planning.
He points out EIS (and VCTs) were not caught by the FCA’s policy paper PS13/3, which was released in June 2013 and will come into effect from 1 January 2014.
This put into policy a number of the recommendations included in the FSA consultation paper CP12/19 relating to unregulated collective investment schemes and meant that EIS can continue to be promoted to ordinary retail investors through regulated channels and financial advisers.
Advisers should also remember that EIS investments are unquoted company shares and are therefore not covered by the Financial Services Compensation Scheme.
However Daniel Kiernan, director of alternative investment research provider Intelligent Partnership, points out investors may have recourse to the Financial Ombudsman Service (Fos) if they have been poorly advised to invest.
