FCA Prohibits Marketing of High-Risk Investments to Consumers

The FCA has finalised stronger rules to help tackle misleading adverts that encourage investing in high-risk products.

Under the stronger rules, firms approving and issuing marketing must have appropriate expertise, and firms marketing some types of high-risk investments will need to conduct better checks to ensure consumers and their investments are well matched. Firms also need to use clearer and more prominent risk warnings and certain incentives to invest, such as 'refer a friend bonuses', are now banned.

As part of its Consumer Investments Strategy, the FCA want to reduce the number of people who are investing in high-risk products that do not reflect their risk appetite.

The new rules will not apply to cryptoasset promotions. Once the Government and Parliament confirms in legislation how crypto marketing will be brought into the FCA's remit, the FCA will publish final rules on the promotion of qualifying cryptoassets. These rules are likely to follow the same approach as those for other high-risk investments. Crypto remains high risk so people need to be prepared to lose all their money if they choose to invest in cryptoassets.

Sarah Pritchard, Executive Director, Markets said:"Our new simplified risk warnings are designed to help consumers better understand the risks, albeit firms have a significant role to play too. Where we see products being marketed that don't contain the right risk warnings or are unclear, unfair or misleading, we will act."