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FSA says VCTs, ETPs and Reits likely to avoid Ucis ban

FSA Sky Angular 480

The FSA says it is considering proposals to refine its ban on Ucis marketing to ensure VCTs, exchange traded products, overseas investment companies and real estate investment trusts are not impacted.

The move comes after responses to the regulator’s August 2012 consultation paper on banning the promotion of Ucis to retail investors warned these product areas would be caught by the proposed ban.

The FSA says it is now considering amending its rules to exclude VCTs, real estate investment trusts, exchange traded products and overseas investment companies that would meet the criteria for investment trust status in the UK. It is also looking at concerns relating to the likes of enterprise investment schemes and seed enterprise investment schemes.

FSA head of investment policy David Geale says the central aim of the regulator is to prevent the promotion of non-mainstream pooled investments to ordinary retail investors while allowing scope for firms to market these products, where appropriate, to high net worth or sophisticated retail investors.

He says: “In order to achieve this, our original proposals allowed firms to market products where the promotion met criteria outlined in secondary legislation. We are considering whether this provides sufficient flexibility for firms with high net worth or sophisticated customers.”

The FSA says these considerations are subject to its policy-making process and will only be confirmed once the FCA board has considered them in April. The regulator says it will be contacting key stakeholders to discuss any changes to the new rules in more detail over the next couple of months.

In September 2012, the Association of Investment Companies warned that the current Ucis marketing ban rules would have “significant detriment to the VCT industry” while Bestinvest has said the ban could wipe out as much as 75 per cent of VCT fundraising.

Commenting on the review, the AIC says: “This rethink follows a constructive process of engagement and the AIC is pleased that its concerns over the FSA proposals have been recognised.

“We hope that confirmation of the FSA’s intention to revisit this matter will reduce concerns which may have been felt by intermediaries and other market participants since these proposals were first raised last August.”


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  1. Whilst not ‘mainstream’, VCT and EIS are tax relieved strategies and therefore benefit from Government backing. It would therefore be disappointing if they were to be caught up in the UCIS ban – as such, these noises from the FSA are positive.

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