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FSA to guide IFAs on social impact investing
by Rachael Revesz on Feb 07, 2013 at 07:57
The Financial Services Authority (FSA) is to meet IFAs to discuss how they can safely advise on social impact investments.
Amendments to the Financial Services Bill have put pressure on the regulator to liaise with the profession on social impact investment, a task given to FSA head of investment policy David Geale.
Geale (pictured) told New Model Adviser®: ‘As with ethical investments or environmental investments, we accept that, perhaps for part of a portfolio, making a financial return may not be a client’s only or primary objective.’
He said advisers would have to consider and record all relevant factors when it came to client suitability, and explain disadvantages, such as risk to capital invested and poor liquidity due to a weak secondary market.
Geale will give a speech on 26 February at a social impact investment conference organised by Gavin Francis, founder of Watford-based Worthstone. ‘We’re delighted with the recognition the FSA has now given to social investment,’ said Francis. ‘We see this development as a crucial stage on its journey to becoming an established asset class in the eyes of the wealth advisory community.’
Brigid Benson, principal of Manchester-based Gaeia, said many IFAs were cautious about advising on social impact investing.
‘The FSA is trying to reverse the situation, but the reality is advisers have felt they can’t and should not talk about social impact investment, and have struggled to get professional indemnity insurance for it,’ she said. ‘These investments are essential for the future of our infrastructure, for dealing with environmental and human wellbeing.’
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by William Robins on Mar 06, 2014 at 09:22