FCA ban on UCIS sales to retail investors to boost EIS

The Financial Conduct Authority (FCA) has published long-awaited rules to ban the promotion of Unregulated Collective Investment Schemes (UCIS) to the majority of UK retail investors.

The rules mean that, in the retail market, promotions of these risky and often highly complex fund structures, which are often used for complex tax planning, will 'generally be restricted to sophisticated investors and high net worth individuals for whom these products are more likely to be suitable', said an FCA statement.

Dermot Campbell, managing partner of Kuber, a specialist in investment funds, said: 'The uncertainty that we have experienced over the last six months has had a critical impact on EIS (Enterprise Investment Schemes) fundraising.

'The FCA's announcement has finally silenced all the negative noise and the market can now start to focus on the business at hand.

'Financial advisers can have the confidence to promote EIS to suitable clients; small businesses can be made aware that there is a way to secure much needed funding; and retail investors, currently struggling to find returns, can benefit from the compelling tax incentives that EIS offer.'

Since the mid-1990s, the EIS and venture capital trusts (VCT) markets have raised £13.3bn for more than 20,000 companies. In 2012/13, some £500m was raised through EIS portfolios via the retail market.

Campbell added: 'At a time when options for capital raising are extremely limited for small businesses and the UK economy is in desperate need of growth, EIS is a fundamental solution and needs to be fully promoted and regulated, not pushed back into the pre-RDR dark ages.'

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