Whats wrong with UCIS?
 

Whats wrong with UCIS?

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UCIS is an acronym for Unregulated Collective Investment Schemes and the term unregulated can lead to confusion with inexperienced investment advisers as well as clients. ...

UCIS is an acronym for Unregulated Collective Investment Schemes and the term unregulated can lead to confusion with inexperienced investment advisers as well as clients.
Many perfectly normal and commonly understood Collective Investment Schemes (CIS) are sold to investors throughout the UK. These CIS are regulated and are authorised by the Financial Services Authority (FSA) or they may also be non-UK CIS that are recognised by the FSA. The official term of recognition enables overseas CIS to be marketed to the public in the UK and the FSA will only recognise an overseas scheme if certain specified criteria are met.
CIS are a type of pooled investment. This is an arrangement that enables a number of investors to 'pool' their assets and have these managed by an independent professional, such as a fund manager who will reduce risk by investing the pooled money in one or more types of asset. Most investment ‘funds’ are collective investment schemes.
Investments are often in gilts, bonds and quoted equities, but depending on the type of scheme can go further, such as into unquoted shares or property.

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Whats wrong with UCIS? Whats wrong with UCIS? Document Transcript

  • So What is Wrong with UCIS?A white-paper provided by CEI Compliance Limited, in conjunction with the “ComplianceDoctor” CEI Compliance is a specialist Compliance Consultancy that provides bespoke solutions to discerning FSA authorised firms. Tel: 0800 689 9 689
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689 Now Available as Kindle or EBook Download Is your Compliance Department as compliant as it should be? Are your Compliance Risk Assessments accurate? Is your Annual Monitoring Plan as comprehensive as it should be? Is your risk management managed properly?Click on the pictureAlso AvailableWe cover 11 main areas other than competence andqualifications to help you decide your strategy and assistwith your planning to get you ready for 1st January 2013.Our workbook covers;Business Vision and Mission StatementBusiness PlanOperational PlanFinancial CrimeRemunerationInvestment ProcessCreating a PortfolioGrowingCompliance (including our compliance risk assessmentmethodology)GovernanceExit Strategy – End Game PlanningClick Here to get full details and your copy NOW!©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689DisclaimerPlease be aware that this is only an interpretation of the said guidance and any responsibility must lay with you, the reader,to confirm any rules to your own satisfaction. CEI Compliance accept no liability for any action or inactions you may takedue to reading this document.©2012 CEI Compliance Limited. All rights reserved View slide
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689ContentsHow do we know?................................................................................................................................... 6So what if they are not authorised, recognised or terminated? ............................................................ 7So if they are not subject to the FSA rules, what powers does the FSA have? ...................................... 8What do the FSA mean by promoting UCIS? .......................................................................................... 8So how does a client invest in such a vehicle if they are not promoted?............................................... 8The Fallacy of Assigning an Exemption ................................................................................................... 9Article 3 MiFID exemption and the promotion and selling of UCIS ...................................................... 10The recast Capital Adequacy Directive’ ................................................................................................ 11In particular, PERG 13.5 “Exemptions from MiFID” Q49 and Q50........................................................ 11I currently promote and advise on UCIS. What should I do now? ........................................................ 12Establishing, operating and/or managing your own UCIS .................................................................... 13Appendix ............................................................................................................................................... 15 COBS 4.12 .......................................................................................................................................... 15 PCIS ................................................................................................................................................... 15 Exemptions under PCIS: ................................................................................................................ 15 Recommending UCIS: ten top tips ................................................................................................ 16 Personal protection for Investors ................................................................................................. 17©2012 CEI Compliance Limited. All rights reserved View slide
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689 So What’s Wrong with UCIS?UCIS is an acronym for Unregulated Collective Investment Schemes and the termunregulated can lead to confusion with inexperienced investment advisers as well as clients.Many perfectly normal and commonly understood Collective Investment Schemes (CIS) aresold to investors throughout the UK. These CIS are regulated and are authorised by theFinancial Services Authority (FSA) or they may also be non-UK CIS that are recognised by theFSA. The official term of recognition enables overseas CIS to be marketed to the public inthe UK and the FSA will only recognise an overseas scheme if certain specified criteria aremet.CIS are a type of pooled investment. This is an arrangement that enables a number ofinvestors to pool their assets and have these managed by an independent professional,such as a fund manager who will reduce risk by investing the pooled money in one or moretypes of asset. Most investment ‘funds’ are collective investment schemes.Investments are often in gilts, bonds and quoted equities, but depending on the type ofscheme can go further, such as into unquoted shares or property.Certain CISs have been regulated under the Financial Services and Markets Act 2000 (FSMA)since 1 December 2001. If you require regulatory information about a scheme from before 1December 2001 please contact the FSA’s Consumer Helpline from 8 am to 6 pm onTelephone: 0845 606 1234Type-talk: 18001 0845 606 1234From overseas: (+44) 20 7066 1000 (main switchboard)Or email them at consumer.queries@fsa.gov.ukRegulated schemes include authorised UK schemes like investment companies with variablecapital (or ‘open ended investment companies’) and unit trusts, and recognised offshoreschemes.However, not all CISs are regulated. Those which are not regulated are subject to very tightrestrictions on marketing and are not usually open to investment by retail clients unlessthey fall into a specific criteria or under an exemption, as discussed later.Any CIS that is not authorised or recognised is basically classified as a UCIS and it may beoperated, managed or administered in the UK and nothing should be read into the factwhether the UCIS is UK based or operated, managed or administered in a foreignjurisdiction.©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689How do we know?Anyone can check whether a scheme is authorised or recognised by the FSA by using thesearch facility on the FSA online Register page at http://www.fsa.gov.uk/register/home.do.This register will provide you with the relevant information to find out whether a CIS is, orhas been, ‘Authorised’, ‘Recognised’ or ‘Terminated’ by the FSA.A CIS that is not authorised by the FSA or recognised generally can not be marketed to retailinvestors or members of the general public. If you are a member of the public, or aninvestment adviser who may be considering recommending a CIS to a member of thegeneral public, it would stand you in good stead to check the register before taking anyfurther action regarding investment into the CIS.From the register home page, select the CIS Search Tab Key for Fig 2 1 – 4: Further information for consumers – hyperlinked to other pages 5: Method 1 – Combination by Fund Name /Manager/ ACD 6: Method 2 by Scheme Reference Number On this page you will see a number of elements When looking at the record we have for a CIS you will see the ‘product type’. These are generally authorised investment funds (AIF),which include authorised unit trusts (AUT) and open-ended investment companies (OEIC),or unauthorised unit trusts (UUTs).©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689The main distinction for unit trusts is whether or not they are authorised by the FSA. If anOpen Ended Investment Contract (OEIC) is set up in the UK it can only as an authorised CIS.While the FSA Register can be searched using any number of criteria, you can filter theresults if you know the product is authorised, recognised or terminated. Product Type couldbe;  Feeder Fund  Fund of Funds,  Futures and Options  Geared Futures and Options  Money Market  Non-UCITS Retail  Not Supplied  Other CIS  Property  Qualified Investor  Securities  UCITS (CIS)  UCITS (COLL)  Umbrella  WarrantAnd, if you do not know the full details, you can choose;  Best fit  Starts with or  PartialIf a scheme does not appear on the FSA Register, it is likely to be a UCIS, but the consumerhelpline (above) will confirm or explain further if you are not sure.So what if they are not authorised, recognised or terminated?The reason they are called unregulated schemes is because they are not subject to the FSArules, so the usual restrictions and safeguards concerning schemes’ investment powers, howthey are run, what type of assets they can invest in, or the information that must bedisclosed to investors do not apply to them.To add a layer of protection to the unwary, UCIS’ are subject to tight restrictions on whofirms may invite to invest in them. Generally speaking they are not available for investmentby most retail consumers because, by their nature, they are risky products.©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689As the FSA do not regulate UCIS, in most cases you will be unable to complain about thescheme to the Financial Ombudsman Service or the Financial Services CompensationScheme (FSCS) if things go wrong, but you may be able to complain about a regulated firm ifit promoted the scheme to you or advised you to invest in it.So if they are not subject to the FSA rules, what powers does the FSA have?UCIS are described as “unregulated” because they are not subject to the same restrictionsas a regulated CIS. A main feature of a regulated CIS is in terms of their investment powersand how they are run, and other areas overseen by the FSA. However, although theschemes themselves are not authorised or recognised, persons carrying on regulatedactivities in the UK in relation to UCIS providing personal recommendations to retail clients,arranging deals and establishing, promoting, operating and managing the schemes will besubject to FSA regulation, including Handbook requirements (e.g. the Conduct Of BusinessSourcebook (COBS)).What do the FSA mean by promoting UCIS? CEI Compliance can assist youAs with all marketing, you have to promote a product in all areas of Governance, Riskto make people aware of it. Promoting a UCIS and Complianceinvolves the communication, in the course of Call 0800 689 9 689business, of “an invitation or inducement to engagein investment activity” in relation to UCIS.Although a broad concept, promoting does not only mean communicating through a writtenfinancial promotion or advertisement like marketing literature. It also includes face to facediscussion, phone calls, emails, advertisements, websites, presentations etc. Whenever acommunication is made with a client or a potential client about investment opportunitiesthat relate to or include a particular UCIS, this should be carefully considered whether it ispromoting this investment to the client.Any firm that has a good grip on the definition of promotion, knows when it is appropriateto promote UCIS and when it is prohibited.So how does a client invest in such a vehicle if they are not promoted?UCIS can be promoted, but not to the general public. Section 21 of Financial Services &Markets Act 2000 (FSMA) prevents promoting UCIS by unauthorised persons, unless thefinancial promotion is approved by an authorised (by the FSA) person or benefits from anexemption in the Financial Promotion Order.©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689Section 238 of FSMA then precludes promoting UCIS by authorised persons except where:  there is a statutory exemption in an order made by the Treasury (see the FSMA (Promotion of Collective Investment Schemes (Exemptions) Order 2001 (SI 2001/1060) (as amended)) (in the Compliance world we refer to this order as the “PCIS Order”); or  the financial promotion is permitted under FSA rules exempting the promotion of UCIS under certain circumstances (COBS 4.12).  You will need to ensure, before you promote a UCIS, that a relevant exemption is available. For example, the exemptions permit promotions to the following (this list is not exhaustive):  certified high net worth individuals (see article 21 of the PCIS Order);  certified sophisticated investors (see article 23 of the PCIS Order);  self-certified sophisticated investors (see article 23A of the PCIS Order);  individuals that fall in one of eight categories detailed in COBS 4.12. We have reproduced COBS 4.12R in the Appendix for you but for a full list of exemptions please refer to PCIS Order and COBS 4.12R. For a comprehensive The FSA (soon to be FCA) commentary on the restrictions and exemptions please are constantly refer to The Perimeter Guidance Manual (PERG), conducting themed visit Chapter 8.20 (‘Additional restriction on the promotion of collective investment schemes’). and ARROW assessments throughout the UK. Are you ready for a The Fallacy of Assigning an Exemption visit? All too often, as soon as somebody finds a wording How well prepared are within an exemption that fits their specific need, they you for an interview assign the exemption and the case is closed. When relying on exemptions, you should check carefully that with the FSA? you comply with all the conditions of the relevant We can help – just send a exemption. As a case in point, there are several blank email by clicking conditions regarding the individual wording of statements concerning certified high net worth here and we will send investors, certified sophisticated investors and self- you a brochure straight certified sophisticated investors and related warnings to investors. There may be other conditions to back consider: for example, in the case of the statutory exemptions for high net worth investors and self-certified sophisticated investors, this is restricted to promotions relating to UCIS that arelimited in the types of investments they can make (broadly, UCIS that invest wholly orpredominantly in shares and debentures of unlisted companies).©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689To demonstrate that your firm has adequate procedures in place, you will need to ensurethat you document the exemption/s on which you are relying when promoting a UCIS, andthe reasons why the exemption/s apply. For example, if you use exemptions in articles 21-23 of the PCIS Order, you must show you have complied with the certification requirements.Alternatively, if you use exemptions under COBS 4.12R you must show you have takenreasonable steps to establish that the recipients fall within a relevant category of person.Before an investor agrees to invest in a UCIS the adviser should be clear that they arepermitted to promote the scheme to the investor and explain why the scheme is suitable fortheir particular circumstances.If the investor is not clear whether they fall into any of the groups that can have a UCISpromoted to them they should ask the adviser which category specifically applies to them. Ifthey have already been sold a UCIS they can still ask the firm that sold them the plan whicheligible investor group they fall into. So as an adviser, you should be fully aware of theexemptions and how they are applied, in case you are asked. It is also good practice to makenote of the discussion in your fact find or client file. A copy of the certification should alsobe placed in the file, if not already provided.The investor may also confirm with the adviser what charges there are, what the rate ofreturn is and whether this is ‘actual’ or ‘targeted’.So the bottom line is that you have to conduct your KYC exercise with extreme diligence andascertain the investor’s exact position, as required by COBS 9.2, and that they are accuratelyidentified under the exemption in COBS 4.12R and that UCIS can be promoted to them as apotential part of the portfolio.Article 3 MiFID exemption and the promotion and selling of UCISWhere a UCIS promotion is permitted to be made, the COBS rules apply differently inrelation to the Markets in Financial Instruments Directive (MiFID) or equivalent thirdcountry business and non-MiFID business.If you consider your firm as a non-MiFID firm, you must ensure you do not fall foul of the‘Article 3 MiFID exempt firm’ requirement. For example, you will fall outside the MiFIDexemption if you transmit orders directly to operators of UCIS unless they are fundmanagers to which MiFID applies.For more details you will need to refer to Chapter 4 of the ‘MiFID Permissions andNotifications Guide – Update’ 2007 and PERG 13 ‘Guidance on the scope of the Markets inFinancial Instruments Under COBS 9, ‘Suitability (including basic advice)’ rules, before yourecommend a UCIS, you will need to gather information about your client to establishwhether the UCIS is suitable for that person. As the client is likely to be in the above 4categories, you will already have a great deal of this information.©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689When making a personal recommendation or providing discretionary portfolio managementservices on a UCIS, you must meet all suitability obligations. This includes obtaining thenecessary information regarding your client’s knowledge and experience in relation to UCIS,his financial situation and investment objectives, so you can make a suitablerecommendation.As with most other investments, a client investing in a UCIS could lose some or all of theirmoney. However this risk is likely to be particularly relevant to UCIS. UCIS frequently investin assets that are not available to regulated CIS (for example, because they are riskier or lessliquid), or are structured in a way that is different from regulated CIS. Unlike regulated CIS,UCIS are not subject to investment and borrowing restrictions aimed at ensuring a prudentspread of risk. As a result they are generally considered to be a high risk investment and youshould always ensure that clients understand the risks before investing.Can you demonstrate that you can and have discussed with the client and that they haveknowledge, understanding and experience of;  Equities? (Inc Short-selling)  Futures and options?  Derivatives (CDS/Baskets/Exotics/IROs – Monte-Carlo simulation, Asian options etc)?  Leveraging (borrowing to support investment)?  Arbitrage – (ultra high speed transaction through to regular market inconsistencies)?  Unconventional assets such as; o Long-short bond funds. o Managed futures. o Long-short funds. o Structured notes. o Non-public REITs.This above list is not exhaustive and covers a number of generic investment categories, butUCIS are not solely restricted to these and may well invest in more obscure and illiquidinvestments. Just because they say their aim, or the target of the fund is to invest in “x, y &z” doesn’t prohibit them from investing in “a to v” as well.The recast Capital Adequacy Directive’In particular, PERG 13.5 “Exemptions from MiFID” Q49 and Q50Should you breach any of the qualifying conditions (PERG 13.5, Q51), you are required tonotify the FSA of the breach (SUP 15.3.11 R ‘Breaches of rules and other requirements in orunder the Act’). The FSA will then consider whether you should continue to benefit from theexemption and what, if any, supervisory or enforcement action will be taken.©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689For more details you will need to refer to ‘Promoting unregulated CIS – Communicating withclients, including financial promotions.’There are other COBS provisions that apply when you provide investment services inrelation to UCIS, whether these services are advisory or otherwise. In the case of MiFID,firms providing MiFID investment services other than investment advice or discretionaryportfolio management in relation to UCIS, this can include ‘appropriateness’ requirements(COBS 10).Warnings Disclosure: Your clients may not be covered by the Financial Ombudsman Service(FOS), should they have a complaint about the fund or the Financial Services CompensationScheme (FSCS), should they need to seek compensation. You should make this very clear toyour clients. The documents from the UCIS should help confirm whether your clients haveaccess to FOS or FSCS.I currently promote and advise on UCIS. What should I do now?You need to ensure you comply with all applicable requirements concerning your promotionof UCIS and, where this is not the case, you should take appropriate action (includingremedial). This is called a past business review and should form part of any organisation’srisk management strategy.Also, if you have been advising retail customers to invest in UCIS without explicit regard tothe statutory restrictions on promoting UCIS to thegeneral public, you should check with your professionalindemnity insurer whether your cover remains valid. If you need help in howAnother area to act on is review your systems and best to assess your risk,controls especially in relation to financial promotions(including checking whether a client can be promoted just click on this linkto), client risk profiling and its application, and your and send a blank emailconflicts of interest policy. Remember that when it to us and we will sendcomes to promoting and advising on investments, youmay be doing both in the course of the same you a guide on how tocommunication (whether oral or written) and the assess your complianceeffectiveness of your systems and controls will be risks – no charge!essential in ensuring compliance with your regulatoryobligations. You should seek professional advice if youare unsure about your obligations.Understanding individual UCIS and what they invest in is essential to ensuring compliancewith your regulatory obligations. The regulator will expect to see that you have carried outadequate due diligence on any UCIS you recommend and that this is sufficientlydocumented.©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689The FSA have been made aware through their themed visits that some firms arerecommending UCIS without having any regard to the statutory restrictions on thepromotion of UCIS to the general public. If you recommend UCIS to your clients and you arenot aware of the restrictions on promotion, you may be acting in breach of the schemepromotion restriction and putting your clients at a significant risk of receiving unsuitableadvice. If this is the case, as such, you risk not only robust and tough disciplinary action butalso potentially FSMA s150 actions for damages.Establishing, operating and/or managing your own UCISIf you establish, operate and/or manage your own UCIS then you must have permission todo so. If this is not the case then you must stop these activities until you have permissionin place.The regulator will also expect you to notify them of this breach of your regulatoryobligations. Should a firm fail to obtain permission and the FSA finds out, they will considerthe relevant action to be taken.More generally, you should ensure that you have permission which correspond to all yourregulated activities and comply with these. This check should be done at least annuallyalong with your Compliance Annual Monitoring Plan.You also need to be aware that the exemption from promoting UCIS to a certifiedsophisticated investor (article 23 PCIS Order) will not apply to a promotion by you of ascheme, which you operate, to any investor you have certified as a ‘sophisticated investor’.If you need further information please download UCIS Good and Poor Practice July 2010.You may also benefit from reviewing the PS07/11 ‘The Responsibilities of Providers andDistributors for the Fair Treatment of Customers’©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689 Now Available as Kindle or EBook Download Is your Compliance Department as compliant as it should be? Are your Compliance Risk Assessments accurate? Is your Annual Monitoring Plan as comprehensive as it should be?Click on the pictureAlso AvailableWe cover 11 main areas other thancompetence and qualifications to help youdecide your strategy and assist with yourplanning to get you ready for 1st January 2013.Our workbook covers;Business Vision and Mission StatementBusiness PlanOperational PlanFinancial CrimeRemunerationInvestment ProcessCreating a PortfolioGrowingCompliance (including our compliance riskassessment methodology)GovernanceExit Strategy – End Game Planning©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689AppendixCOBS 4.12Exemptions under COBS (4.12):This defines eight categories of persons to whom an authorised person may promote UCIS: Category 1 - Someone who is currently, or has been in the last 30 months, a UCIS participant. Category 2 - Someone for whom the firm has taken reasonable steps to ensure that investment in the UCIS is suitable and who is an established or newly accepted client of the firm. Category 3 - Someone who is eligible to participate in a scheme constituted by the Church Funds Investment Measure (1958), section 24 of the Charities Act (1993) or section 25 of the Charities Act (Northern Ireland) (1964). Category 4 - Someone who is a current or former officer or employee of the firm (or a member of their immediate family). Category 5 - Someone who is admitted to membership of the Society of Lloyds. Category 6 - An exempt person. Category 7 - Someone who qualifies as an ‘eligible counterparty (click HERE) or a ‘professional client (click HERE). Category 8 - A person to whom the firm has undertaken an adequate assessment of expertise, experience and knowledge and to whom the firm has provided certain written warnings.The full COBS exemptions rules on UCISPCISExemptions under PCIS:UCIS may be promoted to persons defined as:Certified high net worthThis person must hold a certificate of high net worth, which will be in writing and signedand dated within the last 12 months by both themselves and their accountant or employer.It must declare that, in the opinion of the signatory, he or she either had an annual incomeof not less than £100k or net assets to the value of not less than £250k during the financialyear immediately preceding the date on which the certificate is signed.Certified sophisticated investorThis person must hold a certificate in writing (signed and dated by an authorised personwithin the last three years) declaring he or she is sufficiently knowledgeable to understandthe risks of investing in UCIS.©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 689They must also have signed, within the last 12 months, a statement confirming they are acertified sophisticated investor.Once these requirements have been met, any communication promoting UCIS must, amongother things, declare that buying units in a UCIS may expose them to a significant risk oflosing all of their investment.Recommending UCIS: ten top tipsSupport services provider Threesixty put together a list of tips and hints for advisersconsidering recommending UCIS1. PI coverAlways ensure you have relevant PI cover prior to making any recommendation. This mayneed to be checked on a case by case basis.2. ReadAll relevant staff and management should read and be familiar with the output of the FSAreview. They should receive training and their CPD should be documented in detail.3. ProcessThe firm must have a robust process for promoting or advising on UCIS which must beknown and followed, by all relevant staff.4. Pre-approvalThe process should include arrangements for pre-approval.5. ExemptionsMaintain management information showing full details of exemptions used and the resultsof pre-approval requests.6. EvidenceSupporting evidence for exemptions claimed should be retained.7. Due diligenceFull due diligence should be undertaken on any UCIS which the firm is considering using.8. PromotionsConsider advice on UCIS to be a ‘promotion and follow the financial promotion rules at alltimes.9. TransparencyThe risks, both general and investment-specific, of a UCIS should be made clear to clients.©2012 CEI Compliance Limited. All rights reserved
  • So What’s Wrong with UCIS? By the Compliance Doctor 0800 689 9 68910 MiFIDIf you are an Article 3 MiFID Exempt firm or an Exempt CAD firm, ensure that orders aretransmitted only to entities allowed by MiFID unless the firm is prepared to opt into MiFIDitself.An Idea for submitting to clients in a suitability report or other recommendationPersonal protection for InvestorsWhere a scheme is not authorised or recognised, persons carrying on regulated activities inthe UK in relation to UCIS – including providing personal recommendations, arranging dealsand establishing, operating and managing schemes – are still subject to our regulation.Before you agree to invest in a UCIS your adviser should be clear that they are permitted topromote the scheme to you and explain why the scheme is suitable for your particularcircumstances.If you are not sure whether you fall into any of the groups that can have a UCIS promoted tothem you should ask your adviser which category applies to you. If you have already beensold a UCIS you can still ask the firm which eligible investor group you fall into.If you are considering investing in a UCIS be sure to read all available information, ensuringyou understand and accept the risk that you may lose some or all of your investments. Ifyour adviser is not able to clearly explain the nature of the underlying investment and risk toyou then consider whether you fully understand what you are investing in.You should also confirm with your adviser what charges there are, what the rate of return isand whether this is ‘actual’ or ‘targeted’.Perhaps most importantly, you should ask whether you may have access to the FOS andFSCS if things go wrong, and seek independent professional advice if you are in any doubtabout the potential risk and returns involved.If you believe that a firm has promoted or sold you a UCIS that is not suitable for you, sold itto you unlawfully or that the risks were not fully explained you should make a complaint tothe firm involved.©2012 CEI Compliance Limited. All rights reserved