COBS 4—exemptions in relation to UCIS and close substitutes

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • COBS 4—exemptions in relation to UCIS and close substitutes
  • What are non-mainstream pooled investments?
  • Restrictions on promotion of NMPIs
  • The effect of COB 12.4 on retail distribution channels

COBS 4—exemptions in relation to UCIS and close substitutes

BREXIT: 11pm (GMT) on 31 December 2020 (‘IP completion day’) marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. Following IP completion day, key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.

This Practice Note explains the exemptions from the financial promotion restriction which are contained in chapter 4.12 of the Financial Conduct Authority (FCA) Conduct of Business Sourcebook (COBS 4.12). COBS 4.12 sets out rules relating to the restrictions on the retail distribution of unregulated collective investment schemes (UCIS) and close substitutes (together defined as non-mainstream pooled investments (NMPIs) to ordinary retail investors. The COBS 4.12 requirements in were introduced on 1 January 2014 through PS13/3: Restrictions on the retail distribution of unregulated collective investment schemes and close substitutes.

What are non-mainstream pooled investments?

The rules in COBS 4.12 aim to protect ordinary retail investors from risks arising from the inappropriate promotion of NMPIs where retail investors are sold products which are complex in nature and present a risk that the 'average' retail investor may not be familiar with or truly understand.

The category of NMPIs includes,

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