Venture capital trusts (VCTs) have escaped the City regulator’s unregulated collective investment scheme (Ucis) ban.
According to the Financial Conduct Authority latest consultation on Ucis, the controversial new rules have also excluded exchange traded products and enterprise investment schemes.
The regulator confirmed, however, that the following investments will be subject to marketing restrictions:
Units in qualified investor schemes (QIS)
Traded life policy investments
Units in Ucis
Securities issued by SPVs pooling investment in assets other than listed or unlisted shares or bonds.
The FCA said it will continue to review market developments and would take further action if it discovered practices that put consumers at risk, particularly where arbitrage was taking place to avoid marketing restrictions.
Christopher Woolard, the FCA’s director of policy risk & research, said: ‘Consumers have lost substantial amounts of money investing in Ucis and similar products in recent years so the need to introduce new rules to prevent this from continuing was essential.’
Reacting to the decision, Dermot Campbell, managing partner of Kuber, the industry’s first multi-manager EIS platform, said the FCA’s stance could open the door to up to £2.5 billion worth of investment into EIS.
He said: ‘The uncertainty that we have experienced over the last six months has had a critical impact on EIS fundraising. In fact, we estimate that for every adviser who recommended EIS there were another five who didn’t due to concerns about the outcome of the FCA’s decision.
‘The FCA’s announcement has finally silenced all the negative noise and the market can now start to focus on the business at hand.’
Also cheering the announcement, Susan McDonald, chair of EIS fund manager Calculus Capital, said: ‘Imposing a blanket ban on the promotion of all EIS to retail investors would have been heavy-handed and we are pleased the FCA has been more measured in its final decision.’
David Kaye, chief executive officer of Puma Investments, a leading provider of VCTs, added: ‘VCT offers are well-understood and well-regulated; they have to be listed and their corporate governance structures and independent boards have to comply with the stringent listing rules for investment companies.
‘We therefore agree with the FCA’s decision that VCTs should not be classified as unregulated collective investments schemes.’
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