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Unregulated Collective Investment Schemes (UCIS)

Have you been mis-sold an Unregulated Collective Investment Scheme?

Here at Beat the Banks we continue to hear news of investors losing substantial sums of money as a result of putting their SIPPs into risky investment schemes. More worryingly, the number of complaints against professional advisers who have incorrectly recommended such schemes continues to grow. 

The FCA’s advice remains that members of the general public should be extremely cautious of Unregulated Collective Investment Schemes (UCISs) and the advisers who wrongly promote them. If you have invested in a UCIS without being made fully aware of the consequences our team are ready to help you.

What’s the difference between a CIS and UCIS?

A Collective Investment Scheme (CIS) or a pooled investment fund is a pot into which multiple people contribute money. They are run by fund managers who decide where to invest the combined money, usually in ‘traditional’ assets like property, stocks or bonds.

They are a huge variety of these schemes, both UK-based and overseas, that are authorised and regulated by the FCA. However, there are an equally wide variety of investment schemes that are not authorised and regulated by the FCA, and these are known as Unregulated Collective Investment Schemes (UCIS). 

UCIS are considered far higher risk because they are not subject to the same constraints as regulated CIS in terms of the way they operate. They also tend to focus on less traditional investments like:

If you are unsure whether a collective investment scheme is regulated or not, you can check the FCA’s register.

UCIS investor criteria

According to FCA rules, UCIS cannot be promoted to members of the general public and ordinary pension holders. This is because in the vast majority of cases, UCIS are extremely unsuitable.

These schemes can be promoted to a small number of individuals who met a strict set of criteria:

  • certified high net worth investors
  • sophisticated investors
  • self-certified sophisticated investors
  • existing investors in UCIS

The FCA states that FAs must carefully and thoroughly check that their clients meet the correct conditions before recommending a UCIS.

Unfortunately, however, the FCA has uncovered evidence of advisers selling UCIS to members of the general public, in direct violation of their rules. These unwitting customers – who have conscientiously sought professional financial advice – find their hard-earned savings or pension funds at risk and unprotected by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) through no fault of their own.

The FCA is now taking direct action against numerous firms and advisers who have been operating in this way and we expect to see many more join this list in the near future. This is because even though UCIS are not authorised or regulated by the FCA, organisations or individuals promoting these products or arranging deals in the UK are still subject to FCA rules and thus liable for disciplinary action or penalties.

Do you have a UCIS claim?

While UCIS are unregulated, a claim still may be possible in a number of circumstances. 

Was your investment recommended by an IFA?

In cases where UCIS investments were recommended by fully qualified and authorised IFA’s, there is potentially a claim against them if they still exist, or the FSCS is they don’t. 

This is particularly relevant if the following information was not made clear to you at the time of signing up to a UCIS:

  1. The criteria you met that permitted the IFA to promote a UCIS as being a suitable investment for you.
  2. The risks, charges and ongoing management fees associated with your potential investment.
  3. The rate of return on your investment, and whether this was guaranteed.

If you did not know the above facts about your investment then it is very possible it was sold to you unlawfully.

Similarly, you also may have a claim if an IFA was responsible for signing off the transfer of your pension into a SIPP – Douglas Baillie and the Pension Specialists, and Intrinsic and the ER Network are examples of firms who have carried out this sort of bad practice in the past.

Did your SIPP provider accept pension transfers from unauthorised introducers?

You could also have a claim against a SIPP provider if they accepted your pension transfer from an unauthorised introducer. This is because in accepting this transfer, the SIPP provider failed to do proper due diligence on: both the funds coming in (checking if the introducer was regulated by the FCA) in or indeed where the funds went to (checking the legitimacy of the investment opportunity). 

The ongoing Berkeley Burke legal case typifies this sort of unethical and unprofessional behaviour.

If these scenarios sound familiar to you, it’s possible you may be able to make a claim for a mis-sold UCIS. The team at Beat the Banks are ready to help you fight your corner –  call us on 0800 193 1234 to see what we can do for you.

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