Proposed UCIS promotion ban to impact on VCTs
Proposals by the Financial Services Authority (FSA) to ban the promotion of Unregulated Collective Investment Schemes (UCIS) and similar products to the vast majority of retail investors in the UK could have a significant impact on Venture Capital Trusts (VCTs).
While investment trusts are exempt from the proposals, VCTs are not. Consequently, they could face a 75 percent decline in fundraising, according to a survey of leading VCT managers by Bestinvest.
“Managers are perplexed as to why VCTs were not exempted in the proposals as VCTs share many of the characteristics of investment trusts which have specifically been exempted from this proposal, such as independent boards and built-in shareholder safeguards,” said head of VCTs at Bestinvest, Dan Tubb.
“In addition, they are traded on the secondary market, which would remain wholly outside the scope of these proposals. We therefore believe it is right for VCTs to continue to be available to those retail investors who either take appropriate advice as to their suitability or who choose to make their own decisions, and not become the preserve of only the richest investors.”
This viewpoint was echoed by Ian Sayers, director general at the Association of Investment Companies (AIC), which is calling on the FSA to exclude VCTs from the proposals.