FSA could ban UCIS investment adverts

Tim Wallace
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A CRACKDOWN on the promotion of investments in unusual assets like crops and fine wines could be widened, the Financial Services Authority (FSA) warned yesterday, arguing ordinary retail investors do not have sufficient protection against mis-selling.

Unregulated collective investment schemes (UCIS) can currently be promoted if an adviser assesses its suitability – but the FSA believes only 25 per cent of sales to retail customers properly take into account their needs and requirements.

Pensioners have been advised to invest all of their wealth into a single illiquid scheme, for example, which it argues is entirely unsuitable.

However law firm RPC hit out at the mooted ban, describing it as “heavy-handed.”

“The FSA needs to find a way to deal with market problems in a more nuanced way rather than reaching for the nuclear option... The problem is not that the current regime doesn’t work, it’s that the rules aren’t enforced,” said RPC partner Jonathan Davies.

“The FSA itself points out that 25 per cent of current sales are suitable, and its proposals are likely to outlaw these legitimate sales completely.”