In a consultation paper published today, the regulator said their promotion will generally be restricted to sophisticated investors and high net worth individuals for whom the products are more likely to be suitable.

The FSA said that current rules allow UCIS to be promoted to ordinary retail investors if an adviser first assesses the product’s suitability.

Retail investors can include wealthy individuals and successful small businesses.

However, it believes the new rules will prevent this happening, with a clarification in Handbook guidance that personal recommendations generally amount to a financial promotion.

It added its own review had found that only one in every four advised sales of UCIS to retail customers were suitable, taking into account the customer’s needs and requirements.

Other products within the scope of the consultation include qualified investor schemes, securities issued by special purpose vehicles and traded life policy investments.

Gavin Stewart, acting director of policy, risk and research at the FSA, said: “While we have found problems with a number of sales, we are not saying that all existing investments were mis-sold.

“Existing customers who have questions about their investment may want to contact a financial adviser.

“Advisers will be able to help explain how the investment works, whether it is still right for them and what their options are.”

Though UCIS are, by definition, unregulated, the FSA is in a position to take action against regulated individuals who advise on or promote the products.

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In a recent factsheet for advisers, the FSA outlined the rules for advisers recommending or promoting UCIS.

For instance, UCIS can currently only be promoted to individuals who are certified high net worth or sophisticated investors. There are other exemptions, but UCIS cannot be promoted to the general public.

The FSA also reminded firms of their obligations to ensure suitability for each individual client.

Earlier this year, the FSA issued guidance that traded life policy investments should not be promoted to the vast majority of retail investors.

More to follow.