UCIS – Great document, shame about the press
In my opinion this was as good as we could possibly hope for and endorsed what we had been doing for some time by viewing COBS 4.12 merely as an alternative method of defining similar clients already defined under the PCIS rules.
Unfortunately I am much less pleased by the sensationalist journalism which has completely overlooked this and all that the FSA are seeking to do, which is to ensure that COBS 4.12 is not used in a manner that they did not intend. As was the case originally under COBS 4.12, the investor still remained as a retail investor because under MiFid, there was no such thing as a High Net Worth or Sophisticated investor.
This came to the fore in the past few days when an overzealous offshore life company decided that they would not allow UCIS to be held by their portfolio bond on behalf of an appropriate client. This is completely at odds with other parts of the consultation document which confirms that where an IFA does have appropriate clients, UCIS should be considered. How can that be if the wrapper provider refuses to hold such investments ?
I’m sure this must be unintentional but the implication is that their offshore bond is no longer suitable for High Net Worth or Sophisticated investors ! Whilst completely at odds with my experience where sophisticated high net worth investors were very much the intended market, the more serious effect is on the existing HNW investors as they may no longer carry out their investment practice and cannot move assets without incurring significant tax and other charges.
The blame for this I feel must rest with the completely out of context press articles as the document itself begins by pointing out the reason why UCIS exist, the benefits to investors and then defines who those investors should be. It completely takes away the myth and mystique which arose from varying interpretations of COBS 4.12 and confirms that all non-mainstream investments, whatever their status should come under the same rules.
Well done the FSA shame about the press.
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