FCA rule changes surrounding unregulated collective investment schemes have led to some investors reviewing their existing arrangements and questioning the advice they were previously given, the FOS says.
Many complainants who contacted the service said they weren’t made aware of the risks involved in investing in UCIS, according to the FOS.

In the ombudsman’s latest newsletter, released this morning, officials said there appeared to have been an impact since the regulator’s restrictions, which were put in place in January 2014.

The FCA restricted the promotion of UCIS to only “sophisticated” and “high net worth” investors – to reduce the likelihood that they’ll be sold to ordinary retail consumers.

The FOS newsletter stated: “These rule changes seem to have alerted some investors to review their existing arrangements – and to question the advice they were previously given.

{desktop}{/desktop}{mobile}{/mobile}

“There’s been some confusion over whether or not we can look at complaints about UCIS – because by definition they’re 'unregulated'.

“But while the schemes themselves are unregulated, the actual advice given by businesses is often regulated – and so covered by us.

“The fact that someone may appear to be an experienced investor doesn’t automatically mean they’re eligible to have UCIS promoted to them.”

The cases seen by FOS officials often feature investors claiming to have been ignorant about what it meant to get involved in the schemes.

The newsletter stated: “In many of the complaints we see, people tell us they weren’t made aware of the risks involved in investing in UCIS – or that they didn’t know what exactly they were investing in. Some people say that, until something went wrong, they hadn’t even heard of UCIS.

“If a complaint is referred to us, we investigate whether the business carried out the checks required at the time they gave the advice to invest. 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.”

Each case will vary depending on individual circumstance, the FOS said.

But it will involve “considering the consumer’s attitude to risk, their existing assets, their investment experience and their investment objectives”.