A law firm has warned that advisers are carrying out inadequate factfinding on unregulated collective investment schemes as inappropriate switching into the schemes
Speaking at a DWF Fishburns seminar in London last week, senior solicitor Charlotte Adol (pictured) said the law firm is seeing advisers gathering insufficient information about clients’ existing arrangements.
In June 2013, the FCA published final rules which banned Ucis being marketed to investors unless they are sophisticated investors or high-net-worth individuals.
Adol said: “It seems some advisers have sought to persuade their clients that they are sophisticated investors to try and bypass the new rules.
“There are also issues around inadequate factfinding. Limitations in the use of risk-profiling tools, unclear customer risk categories and insufficient information gathered about a client’s existing arrangements all continue to be problem areas where we see advisers falling foul of the rules.”
She added that advisers must also ensure client assessments are documented in sufficient detail.
Adol said: “Unsuitable or inappropriate switching remains rife. Obvious examples include pension transfers into Ucis and a failure to consider and explain to the customer the impact of additional charges.”
The Financial Ombudsman Service has seen a 49 per cent rise in Sipp complaints year-on-year, from 697 to 1,039. The majority of cases relate to advice to invest in Ucis.