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FSA targets wrap and Sipp providers in Ucis clampdown

FSA Front 480

The FSA is preparing to scrutinise the role of wrap and Sipp providers as part of a wider clampdown on the marketing and promotion of Ucis investments.

In August, the regulator proposed banning the promotion of Ucis and similar products to retail investors unless they are sophisticated, high-net-worth individuals.

The ban would cover what the FSA calls “non-mainstream pooled investments” including Ucis, qualified investor schemes, securities issued by special purpose vehicles and traded life settlements.

Some structured products linked to non-mainstream assets would also come under the ban.

Speaking to Money Marketing, FSA technical specialist Jason Pope says: “Quite a significant minority of Ucis are accessed within Sipps and a majority of Ucis are held within some other platform or wrapper.

“We would like firms to think about the proposition they are creating for their customers and whether it suits the needs and risk tolerances of their target market.

“We are looking more at whether the products used to hold certain investments, including Ucis, are appropriate for their target market.”

Pope says the regulator will consider an outright ban of Ucis sales if behaviour does not improve.

He says: “If we saw continued bad behaviour, we would have to consider what we can do. FSMA section 238 says you are only allowed to promote collective investment schemes in certain circumstances.

“Advisers recommending on that basis are following the Treasury’s rules rather than ours. If circumstances became so bad that we would want to ban the product, we would need to work with the Treasury. Obviously we hope it does not come to that.”

Syndaxi Chartered Financial Planners managing director Rob Reid says: “This is an essential extension of the work the FSA has already done. In was inevitable that providers would eventually get dragged into this.”


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