The Investment Management Association has warned the FSA further Ucis mis-selling could occur if it permits the products to be recommended as a replacement product for existing Ucis investors.
It has called on the regulator to make advisers undertake a review of a consumer’s risk profile before a replacement product is recommended in its response to the FSA’s consultation on Ucis products.
The FSA had proposed existing Ucis investors be exempt from promotion restrictions where the product was intended to absorb or take over assets in an existing product or an alternative to cash.
IMA senior adviser for retail distribution Andy Maysey says: “The FSA acknowledges that the original investment could have been mis-sold and was unsuitable for the investor and, indeed, that the proposed re-investment product could be no more suitable than the original one.
“It seems odd that a further mis-sale is permitted without ensuring suitability for the investor.”
He adds: “On the face of it, the investor’s holding of a previously mis-sold unsuitable product does not render the investor any more sophisticated or capable of understanding the inherent risks in such products.
“Therefore, we would urge the FSA to consider the introduction of an obligation to review the consumer’s risk profile as part of the process surrounding any recommendation for reinvestment of proceeds.”