FSA crack down on high risk fine wine investments

As reported in July a BBC report had revealed that UK fine wine investors had lost £100m over 4 years due to failed wine companies. Now the FSA are looking to crack down on the selling of high risk investments such as fine wine to inexperienced investors.

They propose to ban the promotion of Unregulated Collective Investment Schemes (UCIS) to ordinary retail investors. So investments including traded life policy investments, fine wines, crops and timber should be sold only to the most sophisticated high-net-worth individuals. These type of investments are being sold to people who are not aware of the risks and have no access to any compensation if they fail. The FSA had found that ‘only one in every four advised sales of UCIS to retail customers were suitable, taking into account the customer’s needs and requirements'.

The proposals are under consultation until mid-November, when they will go to review. The new rules, which financial advisors will have to adhere to, are expected in the first quarter of 2013.