FSA says new UCIS rules could cut FSCS costs

The Financial Services Authority (FSA) believes its proposed rules on the promotion and sales of unregulated collective investment schemes (UCIS) could lead to a reduction in Financial Services Compensation Scheme (FSCS) costs for advisers.

A consultation paper issued on Wednesday set out the regulator's plans to ban the sales of the products to 'ordinary' retail investors and tighten the due diligence and record-keeping obligations on advisers. In the paper, the regulator explained how its efforts could prevent further costs being heaped on FSCS levy-payers. "As professional indemnity insurance does not always cover the promotion or sale of UCIS, some firms have been bankrupted when dealing with complaints and paying redress," it said. "Liability can then fall on the FSCS, leading to costs for the wider industry. Red...