Independent advisers who deal compliantly in complex products such as unregulated collective investment schemes (UCIS) should charge a premium for the service from 2013, Threesixty's Tony Bray has said.
Bray, who heads up the client team at the support services provider, warned delegates at the Personal Finance Society conference last week not to try to cut corners when advising on UCIS, particularly by relying on third parties for due diligence.
The payoff for the extra work created by advising on the sophisticated products compliantly should be in the form of a higher charge, he said.
"You can charge very good fees. I'd expect you to be charging a premium to advise on a UCIS scheme. It is a highly complex and specialist area."
Many advisers will choose not to advise on the area, which will also put those who do in demand, Bray said.
His advice to intermediaries who recommend UCIS - which are not covered by the Financial Services Compensation Scheme, but are included in the scope of the Financial Ombudsman Service for complaints about the quality of advice - is "be safe, not lucky".
He said: "Start from the standpoint that the scheme's MOI (memorandum of information) may be a pack of lies.
"Always use a separate due diligence questionnaire, and keep your due diligence under review."
Firms should set a benchmark for asset allocation - "between 5%-10% as a rule of thumb" - , and ensure they can demonstrate consistency by putting in place strict training and competence and management information regimes, he said.
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