On 29 October 2012, the FSA fined Martin Rigney, a partner and the only advisor at Topps Rogers, £117,330 and banned him from performing any function in relation to any regulated activity in the financial services industry. (The FSA's Final Notice is available here) Rigney communicated financial promotions to retail customers about Unregulated Collective Investment Schemes (UCIS) without assessing whether the customers were eligible to receive them. He also advised customers to invest in UCIS without explaining why such complex and high risk products were suitable. As a result, one customer invested 89% of his portfolio in UCIS; and a retired couple were advised to put 80% of their portfolio in UCIS to provide an income for their retirement. In May 2010, after he'd agreed to stop promoting and advising on UCIS, Rigney attempted to transfer two existing customers’ UCIS holdings to a new customer, without telling him the UCIS had been suspended two years before. Rigney also carried out discretionary portfolio management without his customers’ knowledge, and switched customers’ investments into UCIS without telling them he'd done so.
UCIS can offer better returns than others investments. But they can also be speculative, illiquid, difficult to value and suffer sudden catastrophic loss. For these reasons, the FSA has long regarded UCIS - including UCIS in traded life policies and unlisted shares - as products "that should not be promoted to the vast majority of retail investors" - an assertion that would probably be regarded as unnecessary scaremongering in ordinary times; but these are far from ordinary times.
In the last two years, the FSA has issued 22 Final Notices and 4 Decision Notices for UCIS failures. And most of these notices have been issued against individuals, rather than firms. Because the investment risks in this area can be high, the rules are complex (it seems reasonably common for advisors and consumers to confuse unregulated UCIS with regulated UCITS (Undertakings for Collective Investment in Transferable Securities)) and the FSA still focussing its energies on UCIS failures, these numbers will steadily increase over time.
Topps Rogers was fined £97,600 for UCIS failures in February 2012, and is now in liquidation (the FSA's Final Notice to Topps Rogers is available here). Rigney is bankrupt.