Unit trusts and OEICs

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31. Investor protection

There are three tiers of investor protection; the trustees or depositaries, the Financial Services Authority and the various Ombudsmen and their compensation schemes.

1. Trustees/Depositaries

   The trustees/depositories are the legal owners and custodians of fund assets, whose job it is to safeguard the interests of the investors.

2. Financial Services Authority (FSA)
   • The FSA regulates the management and the marketing of the funds and supervises independent financial advisors and appoints representatives of the individual fund providers.
3. Ombudsmen and Compensation Schemes
   • The Financial Services Ombudsman is an independent body that investigates complaints against Financial Service Providers and can award compensation of up to £100k to investors.
   • The Financial Services Compensation Scheme (FSCS) deals with cases of insolvency involving fund managers and advisers. Investor compensation is 100% of the first £30k and 90% of the next £20k to a maximum of £48,000.

1. What is a unit trust? 2. What is a unit? 3. The trust deed and scheme particulars 4. The people behind a unit trust 5. Charging structure of unit trusts 6. Pricing of units - FSA rules on maximum offer price 7. Pricing of units - FSA rules on minimum bid price 8. Pricing of units - in practice 9. Pricing of units - historic and forward pricing 10. OEICs - Open Ended Investment Companies 11. Shares in OEICs 12. OEICs - pricing 13. OEICs - charges 14. Taxation of unit trusts and OEICs - Introduction 15. Tax treatment of dividends from equity funds 16. Tax treatment of coupons from non-equity funds 17. Capital Gains Tax 18. Tax shelters 19. Investment powers of fund managers: 'eligible investments' 20. Diversification 21. Fund classification: risk gradings 22. Selecting a fund: Defining your objectives 23. Selecting a fund: Active vs passive 24. Selecting a fund: lump sum vs regular savings 25. Selecting a fund: Past performance 26. Where to buy unit trusts and OEICs 27. Buy with or without advice? 28. The mechanics of buying 29. The mechanics of selling 30. Share exchanges and fund switches 31. Investor protection 32. Conclusion

• Exchange-Traded Funds