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FCA asks advisers for views on social investing regulation

FCA asks advisers for views on social investing regulation

The Financial Conduct Authority (FCA) is asking advisers for their views on the regulation of social impact investments.

In a call for input published today, the regulator has asked for responses on whether regulation prevents people from investing in social investments and whether it provides enough protection to clients.

The FCA defined social investments as projects where the aim is to provide a wider social benefit rather than just financial gain.

Clients who wish to invest in social impact investments can do so through shares, securities or unregulated collective investment schemes.

Advisers can recommend these to clients provided they can prove they are suitable for that client. Clients are also able to refer complaints about how these investments are sold to the Financial Ombudsman Service.

The call for input asks advisers and crowdfunding platforms whether they have experienced any problems in advising clients who want to invest in social enterprises.

Advisers have previously raised concerns that regulation makes it difficult to recommended social impact investments to clients.

At a government event in June aimed to promote social investing as ‘mainstream’, EQ Investors chief executive John Spiers said regulation was a ‘big issue’ for advisers who wanted to recommend social impact investments.

‘Regulation is another big issue. Frankly, it’s difficult these days for wealth mangers and financial advisers to market non-mainstream pooled investment solutions,’ he said.

The FCA has also asked social enterprises and consumers for responses to the paper. People can send comments by an online form. The deadline for submissions is 14 March 2016.

Read the full paper here.

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