FOS said since the regulator moved to restrict UCIS sales to ‘sophisticated’ investors in June 2013, an increasing number of advised clients have sought to review their existing arrangements and question the advice they received.

A “significant” number of these were from consumers who had invested in UCIS through self-invested personal pensions (SIPP), it said.

FOS warned that while someone may appear to be an experienced investor they still may not be eligible for such promotions.

The Financial Conduct Authority last January banned the promotion of UCIS to all but experienced investors arguing the often high risk investments are not suitable for most people.

This was partly because the unregulated nature of the products meant investors had no recourse to regulatory protection such as the Financial Services Compensation Scheme or FOS if the investment went wrong.
However, while FOS does not consider UCIS, it does consider the suitability of advice when the products were sold through an adviser.

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It said it upholds “a disproportionately high number of these cases” – around six in 10 against an average uphold rate of half that for pension cases.

“In too many cases though we find that the advice to invest in a UCIS through a SIPP was inappropriate for the consumer and represented a significant risk that didn’t match their profile,” a spokesperson for FOS said.

“This doesn’t mean it’s always wrong to advise people to take out these products. But they are and remain an investment for the more experienced investor willing to take a risk.”

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