On 4 June 2013, the Financial Conduct Authority (FCA) published the final rules restricting the promotion of Unregulated Collective Investment Schemes (UCIS) and close substitutes (which together the FCA defines as Non-Mainstream Pooled Investments (NMPIs)) to retail investors. Due to the previous mis-selling of UCIS to retail investors the rules are being introduced in order to protect ordinary retail investors from the risks arising from the inappropriate promotion of NMPIs.

Accordingly, the following products are subject to the new marketing restrictions: Units in qualified investor schemes (QIS); traded life policy investments (TLPIs); units in UCIS; and decurities issued by special purpose vehicles (SPVs) pooling investments in assets other than listed or unlisted shares or bonds.

The following products are outside the scope of the new marketing restrictions: Exchange-traded products; overseas investment companies that would meet the criteria for investment trust status if based in the UK; real estate investment trusts (REITS); venture capital trusts; enterprise investment schemes and seed enterprise investment schemes, unless structured as UCIS; and securities issued by special purpose vehicles that pool investment primarily in shares and bonds.

The FCA has announced that the rules will take effect from 1 January 2014. In the meantime, however, it suggests that “firms may wish to comply with the new rules sooner, given the significant risk of inappropriate or unsuitable sales to ordinary investors.” The FCA has also stated that it will continue to review market developments and may consider an extension of the scope of the rules if it discovers similar problems in the future.

If you would like further information about the regulation of unregulated collective investment schemes, please speak toToby Stroh, Head of Druces LLP’s Corporate & Commercial team.

This note does not constitute legal advice but is intended as general guidance only. It is based on the law in force at July 2013.

Share this article:

How can we help?

To find out more about our services, please contact us on: