Can I bring investors together to invest collectively in an investment opportunity without being regulated by the FCA?

In the UK, bringing investors together to invest collectively in an investment opportunity typically involves regulated activities such as arranging deals in investments or managing a collective investment scheme. Both of these activities require authorisation from the Financial Conduct Authority (FCA), according to the Financial Services and Markets Act 2000 (FSMA).

There are many things that you need to consider when bringing people together to invest and the list below gives some, but not all, of these:

Definition of Regulated Activities: Activities such as managing investments, advising on investments, or arranging (bringing about) deals in investments are all considered regulated activities under FSMA. Operating a collective investment scheme, where you pool investor funds to invest collectively, is also a regulated activity.
Authorisation Requirements: To legally perform these activities, you must either be authorised by the FCA yourself or perform these activities as an Appointed Representative under the supervision of an FCA-authorised firm.
Exemptions: There are very few exemptions to these requirements, and they typically do not apply to general scenarios of organising collective investments. For example, exemptions might exist for specific types of family arrangements or closed groups with no promotional activity to the public, but these are narrow and specific. An investment club might not need to be regulated and, in certain circumstances, a group of investors (institutional, professional or even retail) could agree to invest on a pari-passu basis even if one investor first identifies the investment opportunity and is asked to lead the investment group.
Risks of Non-Compliance: Operating without the required FCA authorisation can lead to significant penalties, including fines and criminal charges. It's important to ensure full compliance with regulatory requirements before initiating any investment activities involving other parties.

Given these regulations, if you plan to bring investors together for collective investment, it's highly advisable to seek legal advice and consider obtaining the necessary FCA authorisation to ensure all activities are legally compliant. This helps protect both you as the organiser and your investors. If you want to know more about this then contact us.