The FSA says it will not impose new rules on property investment schemes, although it will support moves to ensure IFAs' understanding of such schemes is improved on behalf of consumers.
Specialist IFAs advising wealthier clients on portfolio diversification into property investments showed no signs of giving unsuitable advice, according to a review undertaken by the regulator.
However, with signs that sales of such products – all property investments except owner-occupied and buy-to-let – will spread to a wider retail base of less wealthy clients, the FSA says it wants to ensure unspecialised IFAs are up to scratch on the selling of such products.
"As product providers broaden their marketing beyond specialist IFAs the possibility of mis-selling by advisers who do not fully understand the inherent risks in these products may increase,” the FSA says.
For example, limited partnerships involve particular risks, which IFAs and their clients need to be made aware of, the FSA adds.
Some £3.85bn was invested in the sorts of property investment schemes reviewed by the FSA when its review started in February 2003.IFAonline
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