FCA has made rules to ban the marketing of UCIS or “close substitutes” to the retail market. It has created a definition of “non-mainstream pooled investments” (NMPI) to cover all these products. Within the scope of the restriction are units in qualified investor schemes (QIS), traded life policy investments, units in UCIS and securities issued by special purpose vehicles (SPVs) pooling investment in assets other than listed or unlisted shares or bonds. However, FCA has decided to exclude several products, including exchange traded products, overseas investment companies that would meet the criteria for investment trust status if based in the UK, real estate investment trusts, venture capital trusts, enterprise investment schemes and seed enterprise investment schemes (unless structured as UCIS). In addition, the restriction does not cover SPVs pooling investment primarily in shares and bonds. New rules amend the Glossary, the Conduct of Business Sourcebook and the Collective Investment Schemes Sourcebook, to introduce new definitions, set out the new restrictions and specify the circumstances in which firms may market NMPI to retail customers (including new provisions on high net worth and sophisticated individuals), give guidance on the suitability test and set out record-keeping requirements. The new rules take effect from 1 January 2014 although FCA encourages firms to apply them sooner if possible.
FCA notes it will continue to monitor promotions and sales of investments that fall outside the ban. Specifically, it plans to consult on restricting sales of products recently introduced to the retail market such as contingent convertibles (CoCos), building society deferred shares and similar instruments. (Source: FCA Bans NMPI Retail Sales)