FSA to review sales of UCIS in 2012

The Financial Services Authority (FSA) is to conduct a review into the sale of unregulated collective investment schemes (UCIS) early next year.

It will be published in the second quarter of 2012 and follows a series of concerns raised by the regulator and within the industry in recent months over the sale of the products.

The minutes for the July 2011 meeting of the FSA board, where the review was confirmed, show there was concern about the current selling practices of UCIS and the descriptions of exemptions in the rules, and that this "could be made clearer".

Board members were also keen to see the executive consider the categories of investors to whom UCIS funds could be promoted.

Another key issue they wanted looked at was how adviser knowledge of UCIS will affect their independence post-retail distribution review implementation.

The minutes said: "There was an issue in relation to the RDR and the need for advisers to be qualified to sell these products in order to be classed as independent, regardless of whether they operated in that market."

The FSA board also noted that, from summer 2013, the Alternative Investment Fund Managers Directive will control management and marketing of alternative investment funds.

In recent months, a number of advisory firms and individuals have been fined over failings in relation to the promotion and sale of UCIS.

The question of whether knowledge of UCIS would affect the independence of advisers has also been repeatedly brought up.

Although the FSA has said advisers would only have to consider UCIS if they felt they may be suitable for their clients, other have pointed out that they would need to have adequate knowledge of the products in the first place to make this judgement.