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Is Private Equity the Next Mis-Selling Scandal?

ended 09. September 2025

From next week, Hargreaves Lansdown will begin offering clients access to two new funds from Schroders Capital under the FCA’s Long Term Asset Fund (LTAF) regime. Investors with at least £10,000 to commit through their SIPPs will be able to gain exposure to Schroders’ private equity and energy transition infrastructure strategies. To encourage uptake, HL has negotiated reduced ongoing charges for participants.

Industry figures at both Schroders and HL have described this as a milestone in the evolution of UK investing, opening up areas of the market once reserved for institutions. The FCA originally introduced the LTAF structure in 2021 to provide regulated access to illiquid investments, and the Chancellor has since gone further by allowing these funds to be held within ISAs.

Proponents argue this gives long-term savers new tools for growth and diversification. Yet concerns are growing in some quarters. Speaking recently in the House of Lords, peers highlighted that many retail investors may not fully grasp the complexities of private markets, particularly around liquidity. Unlike listed shares, these assets cannot be quickly sold, and valuations can be less straightforward.

The key question is whether this development marks genuine progress in democratising investment — or whether, without proper safeguards, it risks becoming another chapter in the UK’s mis-selling story.

We are interested to hear from IFAs, compliance specialists and wealth managers:

  • Do you see this as a valuable addition to client portfolios?
  • Or do the risks outweigh the potential rewards?

8 responses from the Newspage community

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Scott Gallacher
Director at Rowley Turton
Do we learn nothing from past scandals? Private markets may have a role in niche areas like Business Relief schemes, but they’re not something I’d want most clients entering directly. From conversations in adviser circles, there’s a view that private equity valuations are currently under pressure and that some investors feel stuck in them. That raises a concern: are retail investors being invited in to share in new opportunities or, as some suggest, to provide a liferaft for those already stranded?
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Rob Mansfield
Independent Financial Advisor at Rootes Wealth Management
These funds are a square peg in a round hole. The documentation around these investments needs to be crystal clear as to how someone can sell them and the timescales involved. We've already got closed-ended vehicles, which are great for unlisted investments. Maybe we should support that sector rather than risk a repeat of funds seizing up when there's a rush for the door.
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Philip Dragoumis
Director and Owner at Thera Wealth Management
As advisers and fiduciaries, we will not let our clients be an exit strategy for PE firms looking to offload their assets. These are illiquid and expensive products and all the research suggests that they have underperformed global equity indices when adjusted for leverage.
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Pete Mugleston
Mortgage Advisor & Managing Director at onlinemortgageadvisor.co.uk
We’ve been here before. The collapse of Neil Woodford’s fund showed what happens when retail investors are exposed to illiquid private assets without fully understanding the risks. Private equity and infrastructure can offer diversification, but they’re hard to value and you can’t just sell out if you need the cash. Unless the safeguards are watertight, opening these up to everyday savers risks repeating the mistakes of Woodford and creating another mis-selling scandal.
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Samuel Mather-Holgate
Managing Director & IFA at Mather and Murray Financial
As the UK government are encouraging this, it’s difficult to see how it could become a mis-selling scandal. Lots of new funds will come from direct non-advised clients who will have to declare their sophistication when it comes to investing. Good financial advisers will recognise this is a diversifier and should form a small proposition of the estate. It’s good progress, but glacial progress at the same time.
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Eamonn Prendergast
Chartered Financial Adviser at Palantir Financial Planning Ltd
Complexity doesn’t equal better outcomes. These funds are highly illiquid, hard to value, and most retail investors won’t truly understand what they’re buying. We’ve been here before, platforms talking up star managers and ‘exclusive’ opportunities that later unravel. For long-term savers, simple, transparent investments usually win out. My concern is this ends up as another well-intentioned idea that risks turning into a mis-selling headache
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David Belle
Founder and Trader at Fink Money
Overall, I think this is good. If we take HGT (HG Capital Trust), they invest in European private SSaS businesses with big moats and the companies they invest in are profitable. This has led to growth over the last five years of about 113%. However, there is one issue and that is private equity is finding it harder to exit, proven by Goldman looking to raise funds of up to $10bn for their private equity holdings. This has been called a lifeline by many recently - with interest rates higher and buyers not as forthcoming, valuations have been knocked and the cost to keep some of these portfolios going have increased. So the question comes down to timing really. Is this the right time to unleash retail buying into a much more opaque asset class than listed equities? I think it's not the right time, but that should be seperated from the asset class itself, which I think retail should have access to.
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Katherine Steiner-Dicks
Founder at BuzzVestor Media
Retail investors in PE funds get the nosebleed seats. Meanwhile, the big players (i.e., pension funds, endowments, insurance companies) have already nabbed the VIP boxes with “side letters”, better deals and all the inside gossip.
The glossy retail investor brochure will provide easy-to-understand information about risks, fees, and redemption procedures. But as a retail investor, you've got little say about terms or fees. Getting your money back could take up to 90 days.
Flooding funds with retail cash waters also down institutional transparency and clout (including private pension funds). That’s when PE funds could value assets too high to attract more retail investors, creating an inaccurate picture of performance. This is where mis-selling could occur and PE brands could ruin the industry's reputation.
What's worse? If everyone in the cheap seats rushes for the exits, funds might dump assets early, killing long-term returns.