Unregulated Collective Investment Schemes (UCIS)

The Financial Conduct Authority (“FCA”) has had to deal with a growing number of complaints relating to the unlawful sales of Unregulated Collective Investment Schemes (“UCIS”) to the general public, including unsophisticated investors and even, on occasion, vulnerable investors such as the elderly. Often, the investor was not aware that they had invested in a UCIS. 

UCIS typically involve highly illiquid and unusual investments such as overseas property developments, storage pods, agricultural land, gold mines, or mini-bonds. Collective investments require pre-authorisation from the FCA. These schemes are often so esoteric that they would never receive FCA approval, even if they applied.

They are high-risk or speculative investments and are not suitable for the average investor. In fact, the promotion and marketing of UCIS are strictly prohibited to the general public, save for a small number of exemptions limited primarily to sophisticated investors and high-net-worth individuals.

What are Unregulated Collective Investment Schemes, and Why are They High Risk?

A UCIS is a collective insurance scheme that is not regulated by the FCA and therefore not subject to the same restrictions as a regulated collective investment scheme. They are high risk, difficult to value and can result in sudden and devastating losses.

Since UCISs are not regulated by the FCA, if you have suffered a loss, it is highly likely that you will not have access to either the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS).

UCIS schemes mix investor funds into a collective pool, but without FCA authorisation, leaving investors exposed if things go wrong.

What Should I Do if I Suspect I Was Mis-sold a UCIS?

UCIS are rarely suitable for the general public. Before being sold a UCIS, your advisor should have ensured that you fit into one of the exemptions and discussed that exemption with you in detail.

Your advisor should have also explained to you that the investment was unregulated and why the UCIS was suitable for your needs and objectives, and explained in detail the specific risks associated with UCIS.

If you are unsure whether your investment is a UCIS, you can usually locate this information in the product literature provided to you when you entered into the investment. Alternatively, you can contact one of our advisors, who will be happy to help at no cost.

UCIS are rarely suitable for ordinary retail investors. They can only be legally promoted to high-net-worth or sophisticated investors, yet we frequently see them pushed to the general public without proper checks or explanations.

How UCIS Mis-selling Claims Are Commonly Established

• Negligent advice by an authorised IFA, even if the adviser simply “rubber-stamped” the transaction.
• Failings by authorised firms involved in the process (e.g., SIPP operators who failed to ensure the investment was suitable and appropriate).

FOS / FSCS or Court Action – Which Applies?

Whether a UCIS claim proceeds via FOS, FSCS, or the courts depends on the type of investment and whether the adviser or operator involved was FCA-authorised. If the people selling the scheme were unauthorised, statutory routes may not be available, and court action may be required.

Documents That Help Establish UCIS Mis-selling

• Fact-finding questionnaire
• Suitability letter
• Key Features document
• Investment application form
• Email correspondence between you and the advisor

What can I do if I suspect that I have been unlawfully sold a UCIS?

You can contact one of our experienced team members, who will be pleased to assist you. We will fully consider your circumstances at no cost and advise you:

• If the investment you were sold was a UCIS
• Whether or not the sale was legal, and
• Whether the investment was negligently mis-sold to you

If you have been sold a UCIS and would like to discuss your circumstances, please get in touch with us today. 

If your case is accepted, you will be offered a No Win No Fee agreement. If you do have a claim against your financial advisor, it will be covered by your advisor’s insurance policy.