A new comparison site for tax-efficient investments is to seek full advice authorisation, after taking legal advice which suggested that its activities will probably be considered to go beyond basic guidance.
Compare Investments Dot Guru Ltd, which will operate the website comparetheinvestments.guru, plans to launch as an authorised representative of a Financial Conduct Authority-authorised firm, with permissions expected to be confirmed within three weeks.
The team said that having “spent a lot of money getting advice on whether we’re giving advice”, they decided it would eventually require a full authorisation. The firm will apply to become directly authorised, with confirmation likely to take six to eight months.
Comeparetheinvestments is being set up by David Newman and Mark Gilmore, the two founding directors of enterprise investment scheme manager Viridis Navitas Capital Partners, along with its director of distribution and former IFA Andrew Clark.
It will offer “condensed” details from publicly marketed investments across the EIS, Seed EIS, venture capital trust and business property relief markets, with each also giving a score out of 10 for a range of measures including charges, investment offer and management team.
It would be the first comparison site to offer full details of all launches available in tax-efficient investment, which has faced criticisms over opacity and high fees.
Mr Newman told FTAdviser that even scaling down the marketing brochures into manageable descriptions would be considered “simple” advice that would require full permissions. This is in line with guidance from the FCA that even group newsletters could constitute advice.
Asked why the site had chosen to compare prices at a general level, Mr Clark again cited advice restrictions. He said that discussing the value of fees would be considered a “full recommendation” and was “more advice than we want to give”.
Mr Clark clarified that a score of five our of 10 would be equal to the median charging, so investors could see who was applying lower fees.
He explained that the average fees for an EIS, for example, would include a 3 per cent initial charge (6 per cent with advice), 1 per cent admin charge, 2.25 per cent management charge applied at exit and 20 per cent on returns above a certain hurdle rate.
Mr Newman said the site was an attempt to promote EIS and other tax-efficient investments, which cannot be directly marketed or advertised because they are limited to specialist clients.
He said the website was primarily aimed at the 343,000 “higher-rate tax payers within the UK’s high net worth and sophisticated investor base”, but that it would also target whole of market financial advisers looking to do broader due diligence. A subscription will cost £299 for a year.
The news comes in the wake of revelations earlier this year that Intelligent Partnership, a research firm looking at tax-efficient investments, was seeking to launch a comparison site for EIS schemes in response to criticism from advisers that information on the sector is so limited.
ashley.wassall@ft.com
