Ucis-related complaints could be relevant: Fos

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Ucis-related complaints could be relevant: Fos

The Financial Ombudsman Service has reiterated that advice given on unregulated collective investment schemes could fall under its remit, despite the products themselves not being covered and promotion of these products being restricted by the FCA.

In the 28-page May edition of Ombudsman News, Fos warned some consumers had been confused about whether they could make complaints regarding Ucis, both because Ucis is unregulated and its promotion is restricted to avoid “ordinary” retail investors.

Fos said: “There has been some confusion over whether or not we can look at complaints about Ucis, because by definition they are unregulated.

“But while the schemes themselves are unregulated, the actual advice given by businesses is often regulated and so covered by us.”

Ucis and close substitutes such as qualified investor schemes, traded life policy investments are not subject to the rules that apply to retail-oriented investment funds, and according to the FCA these products are unlikely to be suitable for the vast majority of retail investors.

Key points from Fos
While Ucis itself is not regulated, the advice given on it is often regulated
An individual appearing to be an experienced investor may not actually be eligible to have Ucis promoted to them

In June 2013 the FCA released an 84-page policy statement, Restrictions on the Retail Distribution of Ucis and Close Substitutes, stopping firms from promoting Ucis to retail customers bar certain promotions from 1 January 2014.

Fos added that while a consumer may appear to be an experienced investor, this would not automatically make them eligible to have Ucis promoted to them by an adviser.

Fos said: “In many of the complaints we see, people tell us they were not made aware of the risks involved in investing in Ucis, or that they did not know what exactly they were investing in.”

Fos added that in a Ucis-related complaint, it would investigate whether the business carried out the checks required at the time they gave the advice to invest, as well as looking at key sale documents from the time.

Adviser view

Gordon Bowden, financial planner at Buckinghamshire-based Quainton Hills Financial Planning, said: “Fos and both the FSA and FCA have made it clear for years that regardless of the product, the advice is regulated. Advisers falling foul of that have only got themselves to blame.”