On Thursday, AES International argued that the sale of unregulated collective investment schemes (UCIS) had reached “pandemic” in expat markets after the Financial Conduct Authority banned them from being sold to ‘ordinary’ retail investors in the UK.
The multi-national advice firm also claimed international life companies are assisting in the distribution of unregulated products by allowing clients – who are often encouraged by unregulated advisers – to hold the schemes within offshore insurance wrappers.
Puzzling
However, AILO chief executive Alan Morgan-Moodie has said he found AES’s comments “puzzling”.
“I believe our members are aware of the sensitivity of this issue,” he said. “Should a policyholder wish to invest in such funds, a member would require direct, explicit instructions to invest.
"Just because the title says 'unregulated' does not necessarily mean 'bad'"
“Any such investments would be on a fully-disclosed basis, and anything else makes our members liable in almost all jurisdictions.”
He added: “Our members can only act on properly authorised instructions; anything else means our members are giving investment advice, which they are not permitted to do.”
Infallible
Morgan-Moodie also pointed out the word ‘unregulated’ does not necessarily mean ‘bad’, adding that “the FCA is not infallible after all”.
In the UK, UCIS can be sold to certified high net worth investors, sophisticated investors, self-certified sophisticated investors, and existing investors in UCIS.
“In my experience most international expatriate investors would be happy to describe themselves as meeting one or more of these categories,” said the AILO chief.
Highly regarded
He said nearly all UCIS funds are collective investment schemes that cannot call themselves UCITS, and are funds from “highly regarded and regulated jurisdictions” such as the USA, Japan and Australia.
“AILO would be pleased to examine the adviser’s claims fully and publicly,” Morgan-Moodie added. “If proved wrong I assume there will be a full retraction.”
