Styperson POPE

Strategy & Compliance for Investment Firms

FSA Sophisticated Investor and High Net Worth Individual Certificates

Some communications about financial services are restricted to ‘certified’ investors. The differences between the certificates are subtle but vital to understand. For instance, just taking sophisticated investors, there are three different types of certificate depending on what the promotion is about and who is making it – it’s possible that a single investor might hold all three and yet still not count as a ‘Certified Sophisticated Investor’ in respect of any particular investment.

Financial Promotions Order Certificates include:

  • Certified Sopisticated*
  • Self-certified Sophisticated**

  • Self-certified High Net Worth**

* Only in respect of the investments the certificate lists
** Only in respect of debentures and shares in unlisted securities

Promotion of Collective Investment Scheme (Exemptions) Order Certificates include:

  • Certified Sopisticated*

  • Self-certified Sophisticated**

  • Self-certified High Net Worth** 

* Only if the listed investments include ‘units in a collective investment scheme’
** Only in respect of schemes investing in debentures or shares in unlisted securities.

When relying on certificates, the promoter must ensure that the investor holds the relevant certificate before making any promotion. We recommend that they see a copy of the certificate either by post, fax or scan. This can be difficult in practice but it is the only route available to firms under these regimes.

To establish whether your target audience is likely to have the required certificates, we recommend that you pick a sample, say 20 investors, and (without telling them anything about the investment), ask them if they have a certificate and if they do, to fax it over to you.

StypersonPOPE can take a quick look at the certificates you receive and determine which ones you can rely on.

Once you know what percentage of your target audience has these certificates then you’ll know how restricted you’ll be in promoting your fund. If it proves to be unworkable, there are alternative routes available but they will likely require more involvement by an authorised firm.

In any case, StypersonPOPE can help you to determine which certificates are appropriate and what percentage of your target audience holds them. If you would like to discuss scheme promotion, please do contact Simon Webber, StypersonPOPE‘s Managing Director, either by telephone or e-mail.

 

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