Marketing and Distribution of Unit Trusts
Distribution rules
Unit trusts reach investors through management company offices, banks, online platforms and registered Unit Trust Consultants (UTCs). A UTC must be registered with FIMM through a principal management company, may market only that principal's funds, and must never hold client money. All applications and payments go to the management company, with an official receipt issued.
Marketing standards
Promotional material must be fair, clear and not misleading, and consistent with the prospectus and Product Highlights Sheet. It must disclose risks, fees and the basis of any performance figures. Past performance must not be presented as a promise; standardised periods and a warning that past performance is not indicative of future results are required. "Guaranteed", "capital protected" or similar claims are prohibited unless the product genuinely offers that feature and it is disclosed in the prospectus.
Suitability and AML
Before recommending a fund, the UTC must know the client's objectives, risk tolerance, time horizon and financial position, and document the recommendation. Customer due diligence and suspicious transaction reporting are required under anti-money-laundering rules; client information must be protected under the Personal Data Protection Act 2010.
Worked example
A UTC's flyer says "SC-approved - guaranteed 12% p.a." and shows only the best three-month return. This breaches marketing rules: the guarantee is misleading, "SC-approved" wrongly implies merit, the performance is cherry-picked, and the flyer is inconsistent with the prospectus. The UTC should withdraw the flyer, use approved material and disclose risks and standardised performance.
Traps
Quoting a single strong period; comparing a bond fund with an equity index; implying SC approval equals safety; accepting cash; marketing another principal's fund.