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FoI reveals extent of FOS Ucis complaints


The Financial Ombudsman Service has received more than 1,500 complaints about unregulated collective investment schemes since new rules were introduced by the FCA in 2014.

Figures obtained by Money Marketing through a Freedom of Information request show the FOS has received 1,532 complaints about Ucis products since 1 January 2014, and 61 per cent of those complaints have been upheld.

The FCA introduced new rules in January 2014 banning the promotion of Ucis schemes to ordinary retail investors in the UK. However since then, Ucis scams have continued to plague the sector and the collapse of advice firms due to the recommendation of Ucis have burdened the Financial Services Compensation Scheme.

The FoI shows that in the 2013/14 financial year the FOS opened 180 cases about Ucis for investigation, with an overall uphold rate of 86 per cent.

This is increased in the 2014/15 financial year – after the introduction of the new rules – to 616 cases being opened for investigation with 56 per cent of those being upheld.

This dropped slightly in 2015/16 to 565 cases opened, however 59 per cent of those cases were upheld.

So far in the current financial year, the FOS has opened 171 cases about Ucis for investigation with an overall uphold rate of 66 per cent.

Some of the Ucis enquiries received by the FOS may turn into complaints while others can be resolved without going through the complaints process. The FOS Ucis category also includes “other non-mainstream pooled investments”.

Yellowtail Financial Planning managing director Dennis Hall says consumers are still not familiar with how Ucis schemes are regulated.

He says: “I don’t think consumers are that clear. I suspect they see something as available to purchase as a product to be sold or bought in the UK and assume that it will have all the necessary protections. That is what they expect the regulator to be there for.

“I have not seen as many Ucis schemes being touted to me as an adviser. There is probably a bit more of a sense check that goes into these things before they are issued.”


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There are 14 comments at the moment, we would love to hear your opinion too.

  1. Nicholas Pleasure 9th September 2016 at 11:27 am

    So here’s how you appear to provide effective regulation. You see an issue, such as UCIS, but it could be Structured Products, Occupational Pension Transfers, PPI, whatever. You allow lots and lots of problems to arise. By this time the papers are full of stories of clients being ripped off and the industry is crying out for the regulator to actually do something.

    It doesn’t bother you as a regulator because you still pick up your big fat pay cheque and enjoy your sponsored final salary pension and extensive industry funded art collection. Meanwhile small firms are buckling under the pressure of your fees and the FSCS levy payments.

    Once there is so much noise the regulator finally rides to the rescue and puts something in place. This then looks like they are responding to the public and being a consumer champion.

    A real consumer champion would act fairly and solve these issues long before they become issues. But by doing this no-one notices you and you don’t look like the hero.

    • Nicholas P, you sum the situation up quite well.

      You could perhaps add the bit about the collateral damage caused by shrieking “toxic!” or by cutting off liquidity for some of the more viable offerings (By viable, I do not necessarily mean ‘suitable’ but those where retail client exposure should have been managed out over time).

  2. UCIS – Unregulated collective investment schemes
    Denis, I doubt if the customer would walk into your office and ask for a UCIS!
    Your comment “I don’t think consumers are that clear. I suspect they see something as available to purchase as a product to be sold or bought in the UK and assume that it will have all the necessary protections.
    The complaints are from non high net worth clients who should never have been sold this product in the first place.The idea is sold by adviser who pocket high commissions and have no consideration of the suitability of these products to the client.
    Unregulated advisers can sell these investments. The system needs to change where UCIS can only be sold by regulated advisers which should then solve the suitability problem.

  3. What it really tells us is that despite RDR and all the additional regulatory costs deemed necessary, there are a bunch of crooks being allowed to continue to trade, and I have no doubts that they leave a trail of devastation well beyond their most recent businesses.

    Inevitably the end consumer pays through higher costs, or their honest adviser goes out of business. Maybe there is a case for looking at these people as having gained pecuniary advantage by deception, treat them as criminals, and use the Proceeds Of Crime Act to recover some of their ill gotten gains. Our industry police force is asleep on the job, time for a change.

  4. Surely the clue is in the name UNREGULATED, why on earth do FOS who are regulated keep lumbering us with the losses from the folly of people who buy unregulated products. Surely FOS should concentrate on regulated products sold by regulated companies who actually pay for the regulation.

    • That's because.... 9th September 2016 at 5:23 pm

      Because the ADVICE is delivered by a REGULATED adviser. If it isn’t then the investor doesn’t have a leg to stand on (from a regulation perspective).

  5. Why are US advisors situated in the US allowed to give advice into the UK without being registered in the UK?

  6. Charles – I must have missed that what is happening via the US?

  7. What a lot of people don’t realise is that most UCIS was sold by former ACA accountants who had become IFAs. in my experience four out of five UCIS sellers were in that category.

  8. Paolo Buco nel Terreno 9th September 2016 at 10:21 pm

    Man in Black makes a valid point that some UCIS have gone under due to un-necessary fire sales due to the ‘toxic’ statement made by the Regulator that ultimately caused the stampede that effectively lost clients a lot of money…….in fact a spokesman of the FSA back in c2010 stated to the press that their decision would lead to losses. This was also stated within their own thematic review report…..not that they would admit to playing a part in the UCIS problem though……..they could have used a toffee hammer to crack this particular ‘nut’ bud decided to use an asteroid instead.

  9. Were the FSA/FCA’s GABRIEL Returns system competently designed and properly policed (it’s patently neither), the adviser population wouldn’t be suffering such wildly escalating FSCS levies. And I’ve just been informed that my FCA levies this year are to be no less than 4% of my gross turnover. For just what exactly?

    Given the huge sums of money the regulator spends on IT (some of it completely wasted), should not its systems incorporate an automatic warning system triggered by any mention of UCIS, followed up by swift and appropriate investigation? Firms with appropriate special permissions for this type of business would, of course, be exempt. It seems so obvious, so practical and so cost-effective. But, as we see so often, the regulator has FAILED in this area. Failed to come down hard on the reckless activities of a small sector of the regulated adviser population, failed to protect consumers, failed to prevent damage to consumer confidence in the industry and failed to prevent the costs of advice having become increasingly unaffordable/ unacceptable for more and more consumers.

    Is any of this even on the FAMR agenda? I somehow doubt it. There’ll be lots of meetings, lots of talking, lots of ideas thrashed around, maybe a few of them investigated a bit further (at huge expense but hey, it’s all just OPM so WTH?), lots of minutes taken and the whole token fiasco will drag on and on ad nauseam. But what of any meaningful, practical value will actually emerge? My prediction is absolutely NOTHING. Which is why the agenda for the FAMR should have been drawn up by an external, impartial body such as the TSC with the power to FORCE the FCA to find a way to implement those parts of it which are non-negotiable. Anything less is just dancing round the may pole.

  10. FCA should de-register unregulated product sales/promotion. If firms wish to use them then they must comprise a separate tier of advice via a separate unregulated advisory firm (you can do this, as you can with tied/whole of market firms!).

    As we well know, this is still a tricky marketplace, frequented by a lot of rogues who will seize any opportunity for financial gain at a ‘customer’s’ expense, promoting whatever is put in front of them, often by the highest bidder. RDR didn’t really change that, it just made the honest advisers more accountable for the actions of others and unregulated products in the market are still fair game for many I’m afraid (maybe more than ever, given the number of ex-advisers out there who have not qualified under RDR, but whom still need a vocation).

    So what to do?… Simple; the regulator should engage with small to medium sized regulated firms for a solution, listen to their views and act upon them to implement a change. There will be a plethora of good ideas as to how this can be overcome, trust me!

    Many firms do not sell UCIS and have very valid reasons as to why…They care about their clients outcomes too much. If a scheme is worthy then it should become a CIS and hang the additional cost and due diligence!

    My own views of course, maybe from a limited perspective and many will disagree, but I am always interested to hear why!

  11. In 2008 when most UCIS sales were made, the market was in meltdown, the so called regulated funds were falling by the wayside, Lehmans, AIG, RBS, HBOS,and Northern rock to name but a few. so lots of advisers moved clients to alternatives, areas that were non-correlated to Euities, property or fixed interests. The vast majority of these funds were in the UCIS sector, for years before this clients had received good returns from these funds. However the regulated sector was worried about he amount of money being attracted by UCIS, the FSA then charged Margaret Cole to write her now famous indescriminate article about “Death Funds”, this had the effect of closing all UCIS funds at the time. And so a self fulfilling prophesy was created, interesting because a week after Ms Coles article, she was not available for comment because she was on garden leave and had been moved on to another very highly paid job. These funds did not all carry high commission, in fact greater commission could have been obtained from a Skandia portfolio and lot of other providers. Some of the funds closed in 2012 are still in existence and about to pay out, under such pressure from the FSA almost any fund would have crumbled, some of those UCIS were really good and didnt deserve to close, but thanks to the FSA they did. Yet SWOP loans are still alive and no one has been sacked or indeed over PPI.

  12. What do you mean comment awaiting moderation?

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