Risks Summary
RISK SUMMARY FOR NON-MAINSTREAMED POOLED INVESTMENTS
Due to the potential for losses, the Financial Conduct Authority (FCA) considers these investments to be very complex and high risk.
What are the key risks?
1.You could lose all the money you invest
If the business(es) you invest in fails, or do not achieve the goals set out in the business plan in the timescales expected, there is a high risk you will lose some or all your money.
Advertised rates of return aren’t guaranteed. If the investments fail to perform as expected or if suitable exit opportunities are not identified, you could earn less money than expected or nothing at all
A higher advertised rate of return means a higher risk of losing your money.
2.You are unlikely to be protected if something goes wrong
In relation to claims against failed regulated firms, the Financial Services Compensation Scheme (FSCS) does not cover investments in unregulated collective investment schemes. You may be able to claim if you received regulated advice to invest in one and the adviser has since failed. Try the FSCS investment protection checker here.
Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
3.You are unlikely to get your money back quickly
The business(es) you invest in could face cash flow problems that delay payments to investors. It could also fail altogether and be unable to repay any of the money owed to you.
There is no established market for these investments and no ability to transfer your holding to another.
You will not to be able to cash in your funds early by selling your investment.
These types of investment should be considered as long term.
4.This is a complex investment
This kind of investment has a complex structure based on other risky investments, which makes it difficult for the investor to know where their money is going.
This makes it difficult to predict how risky the investment is but it will most likely be high.
You may wish to get financial advice before deciding to invest.
5.Don't put all your eggs in one basket
Putting all your money into a single business or type of investment is risky. Spreading your money across different investments makes you less dependent on any individual one to do well.
A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
If you are interested in learning more about how to protect yourself, visit the FCAs website here.
For further information about unregulated collective investment schemes (UCIS), visit the FCAs website here.