Bridging escapes UCIS ban

Robyn Hall

June 4, 2013

UCIS is used by many lenders in the bridging industry as a primary funding line for loans and a ban could have had a devestating impact.

However the FCA has now published its final rules on the ban of both UCIS funds and certain close substitutes to the vast majority of retail investors in the UK.

The rules mean that, in the retail market, promotions of these riskier and often very complex fund structures will generally be restricted to sophisticated investors and high net worth individuals for whom these products are more likely to be suitable.

Christian Faes, chief executive at Montello Finance, said: “The FCA’s ‘ban on the promotion of UCIS to retail investors’ makes a good headline, but doesn’t really change anything from what most people understood to be the case in any event.

“There were some people scaremongering, and saying that the FCA may ban UCIS funds altogether, which was absolute rubbish.

“Many asset classes don’t fit within the regulated fund regime in the UK, such as lending funds. As long as this is the case, UCIS funds – and what the FCA is now referring to more broadly as Non-Mainstream Pooled Investments – will continue to play an important role in the investment market.”

Faes also questioned the regulators decisions to exclude certain funds from the ban.

He added: “There is no logic as to why other funds such as VCTs would be excluded from the FCA rules on promotions.

“We can only assume that they have a lobby group that has managed to push their case – but it doesn’t make a lot of sense.

“In any event, the clarity provided by the FCA is positive. However, in many respects it just confirms what the sensible operators in the market have always known anyway.”

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