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FSA says lack of Ucis sales won’t hit independence

The FSA says advisers can maintain their independent status without having to sell unregulated collective investment schemes.

Speaking at a Personal Finance Society RDR seminar in London today FSA head of investment intermediaries Linda Woodall said independent advisers needed to consider all retail investment products that could be suitable for their clients.

She said the product range being considered by an independent adviser should include collective investment schemes that are manufactured outside the UK but are targeted at the UK market.

But Woodall added: “We have heard a number of comments from the industry that they will have to advise on Ucis, and indeed recommend such products, to meet the independent requirements. We expect Ucis to be suitable for very few of a typical adviser’s clients, if any.

“An adviser’s independent status will not be impacted if they never sell these products because they deem them to be unsuitable for their clients, for example because of the product risk profile, the lack of liquidity in many products and the lack of Financial Services Compensation Scheme cover.”

Woodall said Ucis was included in the range of retail investment products independent advisers have to consider in order to prevent commission being applied on Ucis sales, rather than to boost the number of Ucis products sold.

She said: “Indeed we have significant concerns over the sales we have seen of these products recently. We will continue to closely monitor firms that sell Ucis and will continue to take enforcement action against firms that sell them inappropriately.”

Separately, Woodall also expressed concerns that firms are not leaving enough time to transition to an adviser charging model.

Woodall said: “It is safe to say that implementing a suitable adviser charge has the potential to be the most challenging element of the RDR.

“We have spoken to firms who have moved to an adviser charge proposition already and they have told us that it does not happen overnight.  It takes time to put together a proposal, communicate the change to clients and test it.  In some cases, firms have had to test two or three different models.  So please do not take these changes lightly. Putting off this work involves a huge risk.”


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Have we entered some sort of Orwellian vortex, where we’re “at war with Eurasia, or was it Eastasia” with UCIS and independence?

    The amount of mixed signals and contradictory information the industry has received on this issue is staggering. A cynic might believe that there is division in the FSA over this, one camp harbouring a puritannical view on what independence should mean, and the other realising just how damaging and detrimental it could be to effectively sanction the promotion of UCIS to retail clients en masse.

    I’m not saying all UCIS are bad, but IFAs nationawide must feel some pressure from the regulator to at least be seen to consider these, whilst the FSA is fining firms left, right and centre for failings in this area.

    The FSA should introduce an ‘appropriate exam’ for UCIS, as has been suggested. That way, the majority of the IFA community can carry on as they are in this area (whilst not having to worry about their independence) and those that do want to offer them can, subject to additional competence requirements.

  2. In my view what FSA meant is not that an adviser needs to ‘sell’ UCIS to retain independence, merely that for the right sort of client they need to be able to assess the whole of the PRIPs market, which of course includes UCIS. This still leaves a myriad of questions which still need answering….

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