FCA bans the promotion of unregulated collective investment schemes and close substitutes to ‘ordinary’ retail investors

Effective from 1 January 2014, the Financial Conduct Authority (FCA) will ban the promotion of unregulated collective investment schemes (UCISs) and equivalent pooled vehicles to retail investors. The new rules are published in Policy Statement PS13/3.

The FCA is emphatic in its view that unregulated pooled products should not be promoted to ordinary retail consumers, believing such investments are ‘niche, risky products almost certainly inappropriate for ordinary retail investors’. The new rules apply to the new concept of a ‘non-mainstream pooled investment’ (NMPI). NMPIs include UCISs, qualified investor schemes, traded life policy investments and special-purpose vehicles (SPVs) that do not fall into one of the newly created exemptions.

The regulator emphasises that, regardless of compliance with the black letter law of an exemption from the ban, firms have an overriding obligation to act in the customer’s best interests. The critical question for the firm before relying on an exemption is therefore whether the customer is capable of taking a proper decision regarding the NMPI…

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