UCIS Investment FAQ


Falling interest rates and volatile stock markets have tempted investors to look away from traditional investments towards riskier propositions in a bid to increase yields.

But regulators have ruled that too many investors are losing money because they are unclear of how many of these products wrapped in ‘unregulated collective investment schemes’ or UCIS work.

In response to complaints and concerns some unscrupulous advisers are ripping off investors, Britain’s Financial Conduct Authority (FCA) has outlawed UCIS for all but the most savvy money men.

Here, iExpats lifts the lid on UCIS and how they work

What is a UCIS fund?

A UCIS is a pooled investment, where several partners by a share in a fund. The fund manager then takes that wad of cash and buys one or more assets – generally property, stocks or bonds.

Collective Investments Schemes (CIS) are regulated by the FCA, but UCIS are not policed by any official agency, even though the adviser involved with the scheme may be.

Who can recommend UCIS investments?

The FCA has ruled that only the most experienced investors with a high level of disposable income who understand risk can buy into a UCIS.

Why are UCIS banned?

One of the issues for the FCA was too many self-invested personal pension (SiPP) investors were losing their pension pots due to risky , unregulated investments like overseas hotels and resorts. The FCA feels some investors can afford to take risks because they already have enough cash to provide for their retirement, but others look for high returns without accounting for a downside.

If I have a UCIS what do I do?

You need to ask your IFA what investment class you are placed in and why. If you feel the IFA has put you in the wrong risk band you need to prove the mistake before you can look for redress.

Is a UCIS necessarily a bad investment?

Not at all. UCIS have provided some sound returns for some investors – but others have lost money. If a UCIS is just a small percentage of your portfolio, don’t worry too much. If UCIS make up most of your portfolio, you need to look at rebalancing.

Is my money protected in a UCIS

No. This is part of the high-risk. Only regulated investments are protected by the Financial Ombudsman or Financial Services Compensation Scheme. If the investment bombs, you could lose all your money.

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