In the latest scandal to hit the banking and finance industry in the UK, the FSA (Financial Services Authority) have announced that they are to crackdown on UCIS – Unregulated Collective Investment Schemes.
According to the FSA, recent investigations have uncovered ‘high levels’ of unsuitable advice being given on such investments.
Due to its unorthodox nature, a UCIS is often a more unusual type of investment. The types of scheme that often come under the banner of UCIS’ are crops, fine wines, property schemes, timber and traded life policy investments. As its name suggests, a UCIS is an unregulated investment scheme that is not authorised by the FSA and as such, lies outside the FSA compensation scheme.
Despite the lack of protection, the UCIS market is worth an estimated £2.5 billion in the UK, with an approximate 85,000 investors having put their money into such schemes. Exemption from the FSA compensation scheme makes UCIS investments risky and as such, those promoting or selling such products have a duty to ensure that such schemes are only recommended to ‘sophisticated investors’ rather than ‘ordinary investors’.
The FSA have uncovered that these guidelines are not being adhered to in a significant number of cases and indeed, there are concerns that some financial advisors have been actively promoting these high risk investments to ‘ordinary investors’. Indeed, the FSA have recently had cause to ban the directors of some Independent Financial Advising firms (IFA’s) for the mis-selling of UCIS products.
People who think they may have been mis-sold a UCIS product may have recourse by making a professional negligence claim against the IFA who sold them the product. Where a financial loss and the provision of unsuitable advice can be proven, a commercial litigation solicitor may be able to assist investors in reclaiming their lost funds.
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Farleys Solicitors is a leading full-practice firm of solicitors in Manchester and Lancashire.