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This piece was contributed by Oliver Lodge of UK based Owl Regulatory Consulting.

Whatever our hazy recollections of the good old days, there never was a time when regulators were relaxed about the promotion of unregulated collective investment schemes. Twitchy might be the best description; paranoid might be another, but that would not be entirely fair. Damage has been done with CISs and it has usually been through the unregulated version. The industry is not beyond criticism, either for its management of the funds or for the way that they have been promoted. And the same can be said for animals that were not CISs, but looked remarkably like them. So it’s hard to say that this (FCA’s new rules published in PS13/3) is OTT. And even the dying breed that cleaves to caveat emptor will recognise that investors were significantly misled on numerous occasions.

But none of that quite explains the prominence that UCIS hold in the hierarchy of legislation. The banishment of the funds is enshrined in the Financial Services & Markets Act itself. Does that demonstrate high-level, even parliamentary, concern or is it just legal mechanics? Probably a bit of both, noting, of course, that financial promotion is not a regulated activity and is therefore open to the unwashed. But the impact has been striking. Once launched in legislation, the issue flows down into two Statutory Instruments and into the regulator’s Handbook too. A......................

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