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UK to Clamp down on Fine Wine Investments

Posted: Wednesday, 05 September 2012 18:04

UK to Clamp down on Fine Wine Investments

September 05 : The UK Financial Services Authority is aiming to crack down on the selling of high-risk investments such as fine wine to inexperienced investors by proposing a ban on the promotion of Unregulated Collective Investment Schemes including traded life policy investments, fine wines, crops and timber which should be sold only to the most sophisticated high-net-worth individuals.

FSA, the British equivalent of SEBI, says these Investments are being sold to people who are not aware of the risks and have no access to any compensation if they fail. According to Decanter, investigations earlier this year revealed that the fine wine investors had lost £100 million during the last four years by investing in companies that went under. Current rules allowing advisers to assess the 'suitability' of such risky products before selling them are not working.

The FSA says it found ‘only one in every four advised sales of UCIS to retail customers as suitable, taking into account the customer’s needs and risk profile. and requirements. The FSA found that many promotions breach the restrictions and only a minority of advice is suitable.’

The proposals are under consultation until mid-November, when they will go to review. The new rules, which will be mandatory to follow, are expected in the first quarter of 2013.

In India where fine wine investments are limited to individuals who want to keep them below the radar of Income Tax authorities or those with a burning passion for wines, are indecisive. But gradually, the interest is awakening, especially with the falling stock market and the regular fall in the GDP growth. They need to get proper advice and guidance from experts.

Bordeaux Traders is a Vienna- based fine wine investment advisory company that has recently opened an office in Mumbai to offer such services. Chandigarh-born Robin Khanna, the CEO admits that there are scammers and dishonest people trying to make a buck, especially in this kind of industry where the values traded are extremely high and as a perceived luxury investment, the more popular the industry gets, the more the people will try frauds through such companies and fake bottles etc.

‘For new potential investors, who do their research and stumble across articles like this one, it is obviously not very pleasant, and may put doubt in their minds’, says Robin. However as every industry and every sector suffers from such fly-by-night operators, one can also be reassured about transparency and such dealings coming to light sooner or later.

Robin advises that investors must always do their full research before dealing with any such company and always ensure the company is legitimate. They must look at the certificate of authenticity of the wines purchased. Secondly,the certificate of ownership for their wines is important, as are company history and details. Obviously, how long the company has been in business and the references from the existing investors are important too. He concludes by assuring that all these services are also provided for investors by him and his company.

Before you invest, it might be worth taking tips also from the Paris-based Indian expat, Meenu Kohli who started Winetage Investment Fund in 2009 and is clocking 150% appreciation so far, for the first tranche investors and 30% for those who invested a year later. She says that investors must ensure 5 things before they trust their money with an investment Fund – Strategy, Team, Regulation, Economics and Access to reliable suppliers. For details click Another Wine Fund Goes Bankrupt

She signs off by warning that investors should always read the offer document in detail as it has all the points and it’s a binding contract.

For earlier related articles, visit
Wine Investments in Sticky Territory
Wine Investments: Winetage-The Wine Advantage



peter shakeshaft Says:

Excellent article and as I have had to comment on a number of newspapers and trade press in the UK it is refreshing to note that an Indian based commentator can factually report the story. It may be worth you reading my article in todays Huffington Post for further explanation on the FSA consultation paper. Kind Regards Peter Shakeshaft Founder Vin-X

Posted @ September 07, 2012 10:40


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