‘Complex regulation could stifle ethical investment’

The 44-page report from Ethex, a non-profit web portal for ethical finances, found that more than £1.6bn has been raised by 1m investors for good community causes.

It championed the UK market for ‘positive’ investing in more than 700 ethically-minded businesses. Yet it also expressed concern over a lack of awareness in the sector and confusing rules about which forms of social investing are exempt from the regulation.

Speaking in the report’s foreword, Stewart Wallis, executive director of the New Economics Foundation, said there was a “critical need for infrastructure and information” if the sector is to reach “its fullest potential”.

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The report said that there needs to be more “trusted” sources of information on positive investing, extra support for advisers to help spread the word and collaboration with the FCA to simplify regulation, recommendations that the firm said it was putting in place.

Frank Cochran, director of West Midlands-based FSC Investment Services, said: “If clients are put into an ethical investment fund, all they care about is the end return. The vast majority of our clients do not say they have ethical concerns when we do a factfind, but the minority who do just want to achieve the best possible returns. In the past 12 months, we have been very happy with how our choices have performed, contributing positively to clients’ portfolios.”