Unregulated Collective Investment Schemes

One of the most complained about issues in financial services is the unregulated product. These are so problematic because the operator of the scheme is not (and may not need to be) regulated.

These are often novel and can offer significant rewards. During the early 2000s many unregulated schemes working in the commercial property sector reaped huge gains. However others – such as traded life policy schemes – have failed costing people significant amounts of money.

These schemes are able to be sold to certain types of investors, specifically those who qualify as sophisticated or high net worth and have been advised about the effect of taking on such a certification – that being that they are then allowed behind the curtain to be sold more esoteric products.

This doesn’t allow an advisor to dispense with advising properly but serves to reinforce to the client what they may be getting into.

Sadly, many of these schemes slipped under the radar and offered unrealistic rewards with reassurances of acceptable levels of risk and were sold to ordinary customers – people who could not afford the risks inherent in these products.

Remedying the problems faced by these schemes can require careful unravelling and assessment of option which can be significantly more efficient with early experienced advice.