Regulatory Roundup #3 advised that the FSA was looking at the promotion of unregulated collective investment schemes (‘UCIS’). The Regulator has now published its findings alongside a separate document on good and poor practice.
The FSA sent out questionnaires to 185 firms and eventually narrowed the list down to 14 firms which were subject to a full review. All the firms were IFAs but some, if not all, of the findings will be relevant to any firm that may be involved in the promotion of UCIS.
All 14 firms had some cases of non-compliance with regulatory requirements on promotion and only two of them appeared to adequately understand the rules surrounding UCIS.
The FSA notes that it was disappointed to see that some consultancy firms were also unaware of the regulatory requirements surrounding UCIS (Complyport clients will have this important, and sometimes complex, subject and the COBS 4.12 Rules included in both their compliance manuals and in their compliance monitoring programmes.
As is always, should you have concerns on this, or any other issue, then please do speak to your usual Complyport contact).
There was a general unawareness that a ‘financial promotion’ didn’t simply refer to e.g. marketing literature but also covered areas such as a firm’s website (members of the public should not have casual access to details of any UCIS on a website) and seminars/presentations (firms should take steps to ensure that the intended audience is suitable).
Firms may wish to read e.g. section 3.6 in the ‘findings’ paper and section 3.1 in the ‘good practice’ paper for examples of what is a financial promotion.
The Executive Summary advises us that currently six firms that have been promoting UCIS are being investigated by the FSA’s Enforcement and Financial Crime Division.
