IFA writes to MP over lack of cover for DIY investors

In the letter, Shannon Currie, managing director at Perceptive Planning, says it should be a regulatory requirement that fund information, marketing documentation and prospectus and other literature which could induce a person to invest should be “fair, clear and not misleading”.

In an interview with FTAdviser, Ms Currie said she believes this will give the man on the street the ability to make an informed decision whether to invest or not and what their risks would be - and would bring protection up to the level enjoyed by advised clients.

As an example, she cited the marketing material for the Arch Cru funds, which were suspended in 2009. She stated that it could be argued that the material was misleading, as it “continually stressed that this was a low-risk investment”.

The FSA has said on a number of occasions in the wake of the funds’ collapse that the vehicles were high-risk funds, sold unsuitably as low or medium risk, leading to significant consumer detriment.

Ms Currie added that whilst advised clients have recourse to the Financial Ombudsman Service, the advisers professional indemnity insurance policy or in the worst case the Financial Services Compensation Scheme, for non-advised clients - of which in the case of Arch Cru she said there were likely to be “many” - they have no recourse and have seen a substantial loss.

She said: “This is something I have raised with my MP and IFA Centre who are pressuring the necessary people to see that this is taken seriously and that this sorry set of circumstances is put right.

“We did not advise clients to invest in Arch Cru or Keydata so we could simply ignore it and say this is someone else’s problem.

“However I believe that it is only through pressure by every single IFA and planner on their MPs which will help to address these recent travesties which are in danger of staining each of our own reputations.”