Last week the Financial Conduct Authority (FCA) (the successor to the Financial Services Authority) confirmed that Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCTs) will not be limited in their promotion to only “sophisticated” and high-net worth investors. This followed a consultation in late 2012 to which the BIA provided a response which specifically called for EISs and VCTs to be out of the scope of the new marketing restrictions and this announcement is therefore a very welcome result.

Many small, equity backed bioscience companies in BIA membership rely on a diverse range of investment sources including those raised by these instruments, particularly the EIS. Therefore, any suggestion that such products would, in future, only be promoted to “sophisticated” investors would potentially impact upon the funds raised under these schemes and result in less available finance for innovative bioscience companies.

This would obviously have been an unwelcome move and the BIA made representations to this effect and specifically raised the issue with Ministers in HM Treasury. In this we were guided by the expertise of our Finance and Taxation Advisory Committee. While recognising these proposals were brought forward because of the levels of unsuitable advice provided to investors that had been uncovered by FSA studies, it is the BIA’s view that restricting their promotion to “sophisticated” investors runs contrary to the growth agenda and we specifically asked for them to be excluded from any new restrictions. It is very good to see these concerns were taken on board in the final announcement.

Taking action against the minority of advisers who fail to adhere to a respectable standard of advice rather than closing off opportunities for retail investors to support potentially high-growth sectors would appear a better approach. Moreover, more could be done to actively engage the general public with UK innovation and provide them with the opportunity to invest in innovative UK companies.

This is the concept behind the BIA’s Citizens’ Innovation Funds (CIFs) proposal – engaging the public with innovation and allowing them to invest in UK excellence if they wish to. An independent survey, outlined in our most recent report, highlights the appetite of the public to be given the opportunity to support such companies. For example, nine out of ten who expressed a preference feel the government should provide the general public with the opportunity to invest in innovation.

The policy got a boost earlier this week at a Parliamentary debate on support for science and research held by the MP for Cambridge Dr Julian Huppert. Dr Huppert spoke of the need for government support for the UK’s world leading science and research base ahead of the Spending Review in late June and also outlined his positive view of the CIFs proposal, commenting that government should examine the introduction of such a scheme in the UK.

The BIA will continue to work with members and other stakeholders to promote this and other policies to support the continued growth of UK bioscience companies.