Ban on the promotion of risky schemes

The Financial Conduct Authority (FCA) said yesterday it would no longer allow some high risk investment schemes to be promoted to the vast majority of UK retail investors.
By The Newsroom
Published 5th Jun 2013, 01:01 BST

Publishing final rules to ban the marketing of unregulated collective investment schemes (UCIS) and non-mainstream pooled investments (NMPIs) to consumers, the FCA said these often complex fund structures had cost many “substantial amounts of money”.

The move, which will restrict the marketing of products such as traded life policy investments, or ‘death bonds’, is part of the regulator’s attempt to control high-risk product sales after a series of investment scandals.

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After a lengthy consultation, the regulator said only one in every four advised sales of UCIS to retail customers was suitable and many promotions breached even existing marketing restrictions. A number of NMPIs had also failed completely, with customers losing their total investment.

Under new rules, “sophisticated” investors and high net worth individuals, will remain eligible for these products, however.