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COB 3.11 Unregulated collective investment schemes and qualified investor schemes

Unregulated collective investment schemes

COB 3.11.1G
  1. (1)

    Under section 238 of the Act (Restrictions on promotion), an authorised person must not communicate an invitation or inducement to participate in an unregulated collective investment scheme ("the scheme promotion restriction"). This applies in the case of a communication originating outside the United Kingdom only if the communication is capable of having an effect in the United Kingdom.3

  2. (2)

    However, the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 (SI 2001/1060) exempts from the scheme promotion restriction certain types of communications relating to unregulated collective investment schemes.

  3. (3)

    In addition, section 238(5) of the Act gives the FSA power to make rules exempting from the scheme promotion restriction certain promotions relating to unregulated collective investment schemes, provided that they are not made to the general public. The purpose of COB 3.11.2 R is to make appropriate use of the power which the FSA has under section 238(5) of the Act.

  4. (4)

    Under section 240 of the Act (Restriction on approval of promotion), an authorised person cannot approve, for the purposes of section 21, the content of a communication relating to an unregulated collective investment scheme if he would not have been able, under section 238(1), to communicate it himself.

  5. (5)

    AUTH App 1.20 (Additional restriction on the promotion of collective investment schemes) provides further guidance on the restriction under section 238(1) of the Act (Restrictions on promotion).2

Exemptions from the scheme promotion restriction

COB 3.11.2R

A firm may communicate an invitation or inducement to participate in an unregulated collective investment scheme if the communication falls within COB 3 Annex 5 R.

COB 3.11.3G
  1. (1)

    A firm may communicate an invitation or inducement to participate in an unregulated collective investment scheme, which originates in the United Kingdom or is capable of having an effect in the United Kingdom, only if either:3

    1. (a)

      the communication falls within COB 3 Annex 5 R; or

    2. (b)

      the communication is exempt from the scheme promotion restriction under the Financial Services and Market Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001.

  2. (2)

    Firms are reminded that, even if an invitation or inducement is within COB 3 Annex 5 R, other rules in this chapter may still apply.1

Limited disapplication of this chapter

COB 3.11.4R

In relation to the communication by a firm of an invitation or inducement to participate in an unregulated collective investment scheme, this chapter applies only if:

  1. (1)

    the communication is permitted by COB 3.11.2 R;

  2. (2)

    in the case of a communication originating outside the United Kingdom, the communication is capable of having an effect in the United Kingdom; and

  3. (3)

    the communication is not exempted by the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001.3

COB 3.11.5G

The purpose of COB 3.11.4 R is to give effect to the limitation of the FSA's rule-making power in section 145(3)(b) of the Act (Financial promotion rules). It also ensures that this chapter does not apply to an invitation or inducement communicated by a firm under an exemption from the scheme promotion restriction in the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001.3

Promotion of qualified investor schemes

COB 3.11.6R

4A firm may communicate or approve an invitation or inducement to participate in a qualified investor scheme only if:

  1. (1)

    the communication falls within COB 3 Annex 5 R; or

  2. (2)

    the communication is exempt under the Financial Promotion Order (see COB 3 Annex 1 G).

COB 3.11.7G

4COLL 8 provides for a type of authorised fund (qualified investor scheme) which is intended for particular non-retail investors. COB 3.11.6 R restricts the promotion of such schemes.