The Financial Services Authority (FSA) has warned providers are still using confusion around independence requirements to promote unregulated collective investment schemes (UCIS) to advisers.
The regulator this week sent letters to UCIS providers as part of its work towards creating new rules around sale of the products.
Linda Woodall, head of the Investment Intermediaries department at the FSA, explained how some businesses were taking advantage of the confusion around the need for independent advisers to be 'whole-of-market'.
"It has come to our attention that some UCIS providers are suggesting to distributor firms operating in the general retail market that they must consider and/or recommend UCIS to their clients in order to demonstrate that they offer independent advice," she said.
"This is incorrect."
She also reminded them of the FSA's recent finalised guidance on independence, which states IFAs do not have to consider or recommend products they deem unsuitable for clients.
New rules around the sales of UCIS are expected later this year, when the FSA will make it clear they are "niche products" which would be generally unsuitable for those investors "of ordinary means and experience".
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