On 27 September 2023, the FCA published a new webpage: Financial promotions for high-risk investments, outlining the findings from the FCA’s review of how firms offering restricted mass market investments (RMMIs) have complied with new rules on the customer journey. The webpage also identifies examples of good and poor practice for the wider sector to consider and make any necessary changes to their own practices.
The review was carried out following a review by the FCA of firms’ risk warnings within the Peer-to-Peer and Investment Based Crowdfunding portfolios in December 2022, which found that the level of compliance with new rules in Policy Statement 22/10 (for firms promoting high-risk investments to retail clients) was far below the standard the FCA expects. As a result, the FCA looked more deeply at how firms had implemented the remaining rules from 1 February 2023.
The webpage outlines the findings from the FCA’s multi-firm review, along with examples of good and bad practice, in relation to each of the conditions set out in COBS 4.12A:
- Incentives to invest.
- Cooling off period.
- Risk warnings.
- Client categorisation.
The FCA expects all firms promoting RMMIs and non-mass market investments to consider the findings of the review for their businesses, and any changes they need to make to their practices to meet expectations and improve consumer outcomes. Firms promoting relevant cryptoassets to UK based consumers are also expected to consider the findings due to the requirements set out in Policy Statement 23/6 (financial promotion rules for cryptoassets), which sets out how the rules for RMMIs will apply to qualifying cryptoassets from 8 October 2023.
The webpage explains that the FCA’s strengthened financial promotion rules set a minimum baseline for firms that promote high-risk investments and give clear guidance on what is expected. The FCA’s aim is to raise the overall standard of high‑risk investment promotions. The strengthened rules also support the approach of the Consumer Duty, by encouraging firms to consider for themselves whether they should go beyond this minimum standard, considering the needs of their customers, to deliver good outcomes.