Are you one of those 3 that aren’t suitable?
Back as early as 2013, the Financial Services regulator (then the FSA, now the FCA) produced a damning report, stating only around 1 in 4 UCIS investments are suitable for the investors they are sold to. (FCA Ban)
But what is a UCIS? Do you have one? And why is suitability such a big issue?
Why should you even care?
Because your retirement fund could be at stake…
Unregulated Collective Investment Schemes
That’s what UCIS stands for, and the unregulated part means that these schemes DON’T benefit from overwatch from the regulator in the same way as your bank or the stock exchange does.
But that’s not all. Because they are not regulated by the FCA, investors in UCISs don’t benefit from Ombudsman care, or compensation from the FSCS if something goes wrong with the investment directly, such as fraud, failure or liquidation.
Despite this, a huge number of pension investors in the UK have their money tied up in UCISs, often through Self-Invested Personal Pensions, or SIPPS.
What do UCISs look like?
Unregulated Collective Investment Schemes can come in many forms, including:
- Overseas and UK property schemes
- Forestry and Crop schemes
- Rare earth metals/minerals
- Storage schemes
- Land Banks
Do you have any of these types of investments in your SIPP pension?
Risk and Suitability
Because UCISs are not regulated by the FCA, they are deemed as High Risk investments.
But Spencer Churchill Claims Advice speak to new people every day that have UCIS investments as part of their SIPP, who were told that they were both suitable for the investments, and often that they were actually low risk!
Financial advisers have a duty of care to ensure that clients entering High Risk and unregulated investments such as these fit a certain criteria, including being:
High Net-Worth Individuals earning over £100k per year or with £250k of assets
Sophisticated Investors with experience and knowledge about investing.
If you don’t fit these descriptions, but have UCIS investments, did you know that they were high risk and unregulated?
If you have known, would you have still invested?
If not, you may be able to make a claim, rescuing your pension from a potentially risky and unsuitable spot.
Find out more here.