As the Financial Services Authority (FSA) continues to target those firms which mis sell risky unregulated collective investment schemes (UCIS), the media has identified the most common mistakes made by professional advisors.

First up is the professional’s habit of selling UCISs to vulnerable clients, especially the elderly. The FSA is coming down hard on those firms which they believe have sold risky investments to investors who should never be approached with such vehicles.

Examples of this is Clark Rees, where one partner persuaded his client, nearing retirement, to invest 60% of his money in an UCIS. Another firm, Rockingham Independent, suffered a £35,000 fine after persuading 39 of its clients into UCIS.

In second place is ignorance (malicious, or otherwise) of the rule which says that authorised firms should not promote UCISs to the general public. Topps Rogers Financial Management fell foul of these rules, failing to keep proper paperwork.

Coming up third is the inability of many firms to understand their clients true needs. Taking a hit here was P3 Wealth Management who put one client into a high risk investment, even though they were classified as a cautious investor.

Fifth most common problem concerns training and competence. One firm, Specialist Solutions, proved to have no formal training, or testing; and at Perspective Financial Management, it was discovered that few employees had a good enough knowledge of the sale of UCIS.

Sixth was firms ignoring compliance advice, with many professionals choosing to look the other way when being advised by their own team about UCISs.

Seven came unreasonabe charges and commissions which favoured the firms and their advisors.

And finally, in eighth place, and one which annoyed the FSA intensely, was the culture which existed in many firms, which nicknamed teams of advisors with terms such as “...the famous five...” and “...the three amigos...” as their reputation as sellers of UCISs increased over the years.

Author Bio:

Nick Martin is a regular contributor to the media on personal finance topics and writes regular columns highlighting issues surrounding mis sold investments and mis sold pension

The Compensation Provider
http://www.compensationprovider.co.uk/news/entry/mis-selling-uciss-.html