The first three sections of our review – Overview, Investing Funds and Charges – set out factual information relating to the investment based on the information and responses provided by the investment provider.
The review then covers 8 distinct aspects, designed to cover all of the factors that we feel are most crucial in analysing an investment. These then form the basis of the impact scores at the end of the review. The 8 aspects are:
This aspect covers the locations of the structure and the underlying assets. For each jurisdiction we check its FATF compliance history and its World Bank ranking.
Where an investment’s structure spans multiple jurisdictions we will consider each jurisdiction. Where assets are located globally and not traded on a recognised exchange we conclude that the assets may be located in a higher risk jurisdiction.
Here we examine the main parties involved in the investment, focusing on the investment provider, investment manager, any security trustee or guarantor etc. This includes the directors, partners, owners and significant managers of each party where this information has been provided by the investment provider or we have found from internet searches.
For each party we examine any adverse press, previous corporate failures, regulatory sanctions, relevant sector or investment experience and undertake a credit check on UK based parties. For non-UK based parties we presume an above average credit risk as information may not be available on these parties.
In this aspect we examine the regulatory status and permissions of the investment and parties. This includes whether they are regulated by the FCA or an overseas regulatory body, whether the investment has any FSCS or overseas protection, and whether any financial promotion restrictions that may apply to the investment are acknowledged.
Here we focus on who is responsible for drafting any legal documents, and how any underlying assets (if any) are held by the investment. We also consider if there is any independent verification of title and what investor safeguards exist in case of default of any principal party.
income and reporting
This aspect concerns the operating history of the investment, highlighting if any returns due were not paid in full or on time. We also focus here on the method and frequency of the valuations that are provided to investors.
Here we examine the financial side of the investment. This includes how the investment is valued at the outset, what future financial commitments or potential liabilities exist, the extent to which these liabilities are contained, and any capital protection or leverage in the investment.
In this aspect we examine how readily an investor can realise their investment early, either through redemption or transfer, any restrictions placed upon them, the liquidity of the underlying assets and whether there is a secondary market.
Finally, we consider any potential issues for pensions around unauthorised payments, taxable property & trading as well as more general tax issues around UK or overseas tax charges in connection with the investment.
The next section of the review is then a brief overview of the main investment risks of the investment as set out by the investment provider. Although we may in some cases include our own comments on these risks, we do not aim to ensure that all investment risks are covered and provide this for information purposes only.
There is then a section setting out the source of the information before a section setting out the key considerations we feel subscribers should consider before deciding on whether to allow the investment to be held.
The final section of the review sets out our impact scores for each of the eight aspects detailed above.