We have published our findings following our review of Unregulated Collective Investment Schemes (UCIS),

Background

This review was undertaken when our supervision and assessment work regarding the fair treatment of customers identified issues surrounding the sale of UCIS by small firms.  Our main concerns included:

1. firms’ lack of awareness of regulatory requirements for UCIS;
2. firms’ lack of understanding of the UCIS market and their risks; and
3. UCIS being promoted and recommended to customers who were not eligible for this type of investment.

Key issues for firms when offering advice on UCIS

Firms should satisfy themselves that their advice is suitable and in their clients’ best interests. 

Key Findings

The main issues were:

• Firms were unaware of the statutory restrictions on the promotion of UCIS to the general public.  Therefore, they may have promoted UCIS where this is prohibited; and
• Firms have sold UCIS to customers for whom they may not be suitable.

We have therefore taken various actions which are outlined in our Findings document.

Key Risks

Our three main concerns are that firms do not adequately consider:

• Customers’ eligibility for the promotion of UCIS
• Quality of advice (suitability)
• Risk management and oversight

Further information

In addition to the review’s findings we have published examples of good and poor practices in relation to the promotion and selling of UCIS.  Firms are encouraged to review this document to ensure that the poor practices could not happen in their firms, and if there is a risk of this, that action is taken to mitigate this.

Firms can find more information on this subject in our summary UCIS Factsheet.

More detail on our wider view on promoting UCIS