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FCA update for investors

Thursday 13th November 2014

In recent weeks the Financial Conduct Authority (FCA) has issued several warnings and consultations affecting the investment world. Here is a round up: 
Concerns over SIPPs investing in Emmit plc
The Authority has raised concerns over investors transferring money into Self-Invested Personal Pensions – known as SIPPs – and using the funds to buy shares in Emmit plc (a company admitted to the AIM market on the London Stock Exchange). 
The incentive for investing in Emmit is to receive cash back on investments from a third party but the FCA says it has serious concerns that by investing in the company, investors are putting their pensions at risk. 
The FCA says that those running the scheme are targeting inexperienced investors. According to the Authority, some investors have placed 100% of their pension assets into Emmit shares and may suffer significant financial loss as a result.
To date at least 60-100 investors have invested in this scheme, and as much as £3m-£4m may have been invested by them.
The FCA says it has received reports from a number of authorised firms, which has raised concerns and drawn attention to the scheme.
Emmit plc shares were temporarily suspended by the London Stock Exchange on October 17 and any companies or individuals with concerns or questions are advised to call: 0800 111 6768.
Connaught Income Series 1 Fund support to continue till New Year
The Financial Conduct Authority (FCA) continues to engage with interested stakeholders regarding the Connaught Income Series 1 Fund.
“We continue to believe that it is in the interests of investors and all parties to try to reach a negotiated settlement to address investor losses in the Connaught Series 1 Fund,” it says.  
The FCA has confirmed that its support for these negotiations will now extend to late January 2015.
Consultation on restrictions on the retail distribution of regulatory capital instruments
The FCA is proposing to place new requirements that would apply when mutual society shares are sold to ordinary retail investors. It is also consulting on plans to make permanent the temporary rules, announced in August 2014, which placed restrictions on the distribution of contingent convertible securities (CoCos).  
Christopher Woolard, director of policy, risk and research, said: “One of our objectives is to ensure that consumers have the right degree of protection. That is why the new rules we are proposing will make sure that there are appropriate safeguards in place so these complex instruments are offered only to investors who are able to make informed decisions about them.” 
The consultation on the proposed new rules will be open until 29 January 2015. 
The full paper can be seen here.

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