In its latest newsletter, the ombudsman said more investors are choosing to review their investments after new regulation was introduced in January last year which restricted the promotion of UCIS to “sophisticated” and “high net worth” investors. This rule change was implemented in a bid to prevent UCIS being sold to retail investors.
The FOS said that when complaints have been made about the unregulated schemes, many investors said their adviser had not made them aware of the risks involved, and some said they didn’t know what they were investing in or hadn’t even heard of UCIS until something went wrong.
Extremely serious consequences
“The fact that someone may appear to be an experienced investor doesn’t automatically mean they’re eligible to have UCIS promoted to them,” said the ombudsman. “If something goes wrong, the consequences can be extremely serious.”
Given that UCIS are unregulated by definition, the FOS highlighted that there had been some confusion over whether it deals with complaints about them.
It pointed out, however, that while the schemes are unregulated, the actual advice given by businesses is often regulated, and therefore covered by the ombudsman service.
“If a complaint is referred to us, we investigate whether the business carried out the checks required when the advice was given,” the FOS said. “We’ll also look at key sale documents from the time.”
“Where we decide that advice to invest in a UCIS wasn’t suitable in the particular circumstances, we usually tell the business to put their customer in the position they would be in if they hadn’t received that advice.”
