UCIS clampdown has unintended consequences

In its CP12/19 consultation paper the FSA proposes to limit these products to sophisticated and high net worth investors.

Many property funds may potentially find themselves left out as only certified sophisticated investors will be able to avail of property based asset types - with many brokers reluctant to take on responsibility for certification.

Mike Healy, head of investor relations at Equifinance, said: “Fair enough, so far given that UCIS products are only suitable for those who have a proper understanding of the risks and the pocket to cope if they go wrong.

“The proposed limitation on promotion will mean investments are limited to debt or equity in unlisted companies.

“This will suit funds like Equifinance Loan Fund as the fund invests in loan notes issued by its specialist lending partner, the secured lender Equifinance Ltd.

“It meets the proposed requirements for self-certification and therefore is accessible to the widest possible investor classification.”

The Equifinance Loan Fund recently closed its first £1 million and is targeting £5 million with further monthly closes aimed at £500,000 - subject to investor commitments.