The FSA has sent letters to IFAs demanding information on their advice around, and dealings with, unregulated collective investment schemes (UCIS) for retail clients over the last four years.
The letters, sent on 20 June, ask a number of questions about the 250 firms' UCIS activities, as well as the systems and controls in place since 1 January 2008.
Twenty providers have also been sent the letters, which follow up the regulator's ongoing supervisory work that found the majority of firms were unable to demonstrate they took reasonable care ensuring clients were eligible to receive UCIS promotions.
In the letter to advisers, Linda Woodall, the head of the FSA's Investment Intermediaries department, said: "We are asking a number of firms we believe have recently carried on UCIS business to provide us with information about their UCIS activities and related systems and controls.
"This will assist the FSA in considering its supervisory approach to tackling the risks identified in this market. We have identified a significant increase in UCIS transactions in the retail market over the last four years.
"We have therefore set 1 January 2008 as a start date for this information-gathering exercise."
The letters were sent to a total of 250 retail intermediary and provider firms, with the latter asked whether they intend to continue marketing UCIS to retail investors.
Firms were reminded they must consider the possibility of consumer detriment while reviewing their UCIS activities. They were also told the request for information would not preclude them from any enforcement activity.
The FSA will consult on new rules for UCIS later this year, in line with its view they are "niche products and generally unsuitable for those investors of ordinary means and experience who make up the vast majority of the retail market in the UK".
Since September 2010, the FSA has issued 20 Final Notices and 4 Decision Notices to firms and individuals in relation to UCIS.
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