I wrote last week about the FSA alert on the selling of SIPPs by advisers which then acted as conduits for investments into unregulated funds or unregulated direct investments (for example offshore property developments).
The regulatory approach to unregulated collective investment schemes (UCIS) is well known; they are only suitable for experienced investors who understand the risk that they carry.
They are certainly not for investors who have little or no investment experience and combine that with a cautious investment attitude.
So it was timely that a client of mine reminded me of the outcome of her complaint to the Financial Ombudsman Service.
She had been advised by an adviser some years ago to invest close on £100,000 of her SIPP – created when she went through her divorce – into a UCIS made up of property shares.
Her investment fell sharply in value to its present level of some £26,000. It wasn’t a bricks and mortar fund but a fund based on the shares of property firms.
I wonder what the FSA would think then of an Ombudsman letter to my client rejecting her claim that she should not have been invested in such a fund when they stated:
“I do not find any material differences between the merits of an unregulated offshore property fund and those of a regulated onshore fund”.
Perhaps advisers might have a reasonable expectation of joined up thinking between the FSA and FOS.
