Regulation  

Advisers must get it right on pooled investments

From 1 January, the FCA’s new regime kicked in, which aims to prevent the promotion of pooled investment products, but if firms have not updated their literature, they could face significant fines, according to the Bovill consultant.

Ms Roche-Saunders said: “The FCA is likely to take a strict approach to enforcing the new rules because it has given firms six months to prepare for the new rules, which were finalised in June 2013.

“But some are not yet ready. The FCA is not going to be patient and give businesses any more time to prepare for the new rules as they deliberately gave firms a long lead time to adjust their business practices.”

Article continues after advert

According to the City watchdog, the rules have been introduced to prevent unregulated, collective investments being sold to retail investors inappropriately, which could leave UK investors at risk of serious losses.

Ms Roche-Saunders added: “Financial product providers and financial advisers have to overhaul their marketing material for any products that fall within this new category. Some firms haven’t done that yet.”

In a statement, the FCA said: “We will supervise the market and check that firms are not creating arbitrage opportunities, in order to bypass the rules, leading to detriment for investors. If they are, we will consider options to address such behaviour.”

What is excluded from the definition of non-mainstream investments:

· Venture Capital Trusts

· Enterprise Investment Schemes

· Real Estate Investment Trusts

Source: FCA