The FSA have outlined details of another new offensive against Unregulated Collective Investment schemes (UCIS) and have many alternative investments firmly within their sights.
New rules are due to come into force in early 2013, which will effectively preclude the majority of private investors from UCIS unless the investors fall within strictly prescribed definitions, e.g. the investors should have an income of £100,000, have an investment fund of at least £250,000, and be considered to be experienced/sophisticated investors.
The new rules will also cover Special Purpose Vehicles (SPVs).
This is very admirable as far as unscrupulous financial advisors are concerned, i.e. those who ‘hard sell’ to vulnerable investors, but it doesn’t necessarily mean that there is a problem with the products themselves e.g. wine, carbon credits or property, and in effect it will exclude all but the most wealthy private investors.
The rules concerning UCIS/SPVs will affect legitimate well-performing Hedge Funds as well, so we can expect some reaction to these proposals from some influential figures in the City.
Currently, the FSA have determined that there are some 85,000 people with ‘alternative investments’ worth over £3.5 billion and controlled by over 3,000 companies.
We are advising a number of clients who run alternative investment companies, and investors who are worried about the legitimacy of these investments.
Contact Jeffrey Lewis or Siobhain Egan if you have any concerns.
