Watchdog bans complex funds for investors

Michael Bow
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THE CITY watchdog moved to ban complex investment schemes being pitched to the man on the street yesterday after concerns they were being foisted on punters unaware of the risks.

The Financial Conduct Authority (FCA), led by chief executive Martin Wheatley, said funds which invest in unsuitable assets – known as unregulated collective investment schemes (UCIS) – will no longer be able to be marketed to ordinary retail investors.

It follows an investigation last year by the Financial Services Authority, the FCA’s predecessor, that identified an increase in the sale of funds based around esoteric asset classes like fine wine, timber and crops.

The FCA stopped short of including enterprise investment schemes and venture capital trusts in the ban, giving much needed clarity to an industry that has warned that confusion over the rules was hampering investment.

Director of policy risk Christopher Woolard said: “Consumers have lost substantial amounts of money investing in UCIS and similar products in recent years so the need to introduce new rules to prevent this from continuing was essential.”

UCIS can still be marketed to sophisticated or high net worth individuals, however.