Evidence that the FSA’s interest in the marketing of unregulated collective investment schemes (UCIS) continues – see Regulatory Roundup 19 – in the form of a Final Notice issued to Specialist Solutions Public Limited Company.
It is worth bearing in mind that a UCIS is essentially any fund that is not: an authorised unit trust; an ICVC; or a recognised scheme. Therefore apart from the traditional Cayman Island fund the definition would also cover, say, a European UCITS that has not been formally recognised under s264 of FSMA.
At the heart of the issue was that the firm promoted UCIS to 101 customers, none of whom had been assessed as eligible to receive such promotions. As you will be aware, the Handbook is fairly restrictive on who can receive UCIS promotions. COBS 4.12 specifies eight categories of persons to whom an authorised firm may promote to. The Notice mentions Category 2 (applicable to established or newly accepted clients) and Category 8 (which requires an adequate assessment of the proposed recipient).In addition firms that do not specifically target retail persons may find Category 7 of most use (no restrictions if the recipient is a ‘professional client’ or an ‘eligible counterparty’).
After an ‘early stage’ 30% discount the firm was subject to a financial penalty of £35,000.
