On 1 August 2022, the Financial Conduct Authority (FCA) published Policy Statement 22/10 ‘Strengthening our financial promotion rules for high-risk investments and firms approving financial promotions’ (PS22/10).

In PS22/10 the FCA sets out its final policy and Handbook rules for high-risk investments subject to its financial promotion rules and for firms communicating and approving financial promotions. The FCA also summarises the feedback it received to Consultation Paper 22/2 ‘Strengthening our financial promotion rules for high risk investments, including cryptoassets’ (CP22/2).

The final rules that are set out in PS22/10 are a key part of delivering the FCA’s Consumer Investments Strategy, which sets out the plan to deliver a consumer investment market that works well for people who want to invest with confidence, save for planned and unexpected life events and for the businesses in the real economy for which it provides essential funding. The new rules also build upon the FCA’s more assertive and interventionist approach to tackling poor financial promotions, reducing the potential for unexpected consumer losses.

Earlier consultation

In CP22/2, the FCA proposed changes to the following areas:

  • Classification of high-risk investments: Firms reported to the FCA that their existing marketing restrictions are difficult to navigate and that it is sometimes challenging to understand what restrictions apply. As such, the FCA proposed to rationalise its rules in COBS 4 under the terms ‘Restricted Mass Market Investments’ and ‘Non-Mass Market Investments’.
  • The consumer journey into high-risk investments: The existing marketing restrictions are intended to ensure consumers only access high-risk investments knowingly. However, the FCA’s consumer research has evidenced that this approach is not working as well as it should. As such, the FCA proposed a set of measures to strengthen the consumer journey by proposing changes to the following areas: strengthening risk warnings, banning inducements to invest, introducing positive frictions, improving client categorisation and stronger appropriateness tests.
  • Strengthen the role of firms approving (s21 approvers) and communicating financial promotions: In order to ensure approving firms have the relevant expertise in the promotions they approve and in order to ensure the overall quality of financial promotions in the market is high, the FCA sought to strengthen the role of s21 approvers which would complement a proposed s21 gateway.

Targeted changes to the consultation proposals

In PS22/10 the FCA reports that some respondents, particularly from the investment-based crowdfunding platform and SME financing sector, raised concerns that the proposals in CP22/2 could have negative unintended consequences and deter consumers from investing. Additionally, some respondents asked the FCA to further refine the categorisation of high risk investments. Consequentially, in PS22/10 the FCA has made several targeted changes to their final rules to avoid negative unintended consequences identified by respondents.

The targeted changes are summarised in table 1 at paragraph 1.29 of PS22/10 and include:

  • Investments issued by local authorities: The FCA clarifies that their marketing restrictions do not generally apply to investments issued by local authorities. Where necessary, the FCA will amend its rules to expressly exempt investments issued by local authorities from their marketing restrictions. This will not affect units in unregulated collective investment schemes.
  • Risk warning and associated risk summaries: The FCA will shorten its main risk warning for high investments and allow alternative risk warnings in the following areas:
    • loan-based peer-to-peer P2P agreements and portfolios; and
    • where the activity of the product issuer or provider could be covered by the Financial Services Compensation Scheme.

For the risk summary, the FCA’s rules will allow firms to vary from their prescribed summary if they have a good reason. Equally, firms can include any key investment risks that are not covered by the template. Firms must make an adequate record of any divergence from the template and the rationale behind any change. Firms must ensure their risk summary is accurate and stays up to date with market  developments and business model changes. Finally the FCA will also exempt investment companies listed under Chapter 15 of the Listing Rules that are caught by their marketing restrictions from the risk warning, risk summary and personalised risk warning requirements.

  • Incentives to invest: The FCA will exempt ‘shareholders benefits’. For example, discounted products or services produced or provided by the firm receiving the proceeds of the investment, from the FCA’s ban on incentives to invest.
  • Direct Offer Financial Promotion (DOFP) rules: The FCA will clarify that the DOFP rules relate to promotions which include a manner of response or includes a form by which any response may be made (i.e. a mechanism by which consumers can respond in order to invest their money). They should not limit the information firms can otherwise provide about the investment. Furthermore, the FCA will provide greater clarity on how firms can comply with the DOFP and consumer journey rules.
  • Cooling off period: The FCA will clarify that the 24‑hour cooling off period starts from when the consumer requests to view the direct offer financial promotion (for Restricted Mass Market Investments) or financial promotion (for Non‑Mass Market Investments). Firms will not be able to show consumers the relevant financial promotion until at least 24 hours have elapsed. However, firms can proceed with other parts of the consumer journey while the cooling off period ”applies” such as know your customer / anti-money laundering checks, client categorisation and the appropriateness assessment. If these other processes take more than 24 hours to complete, firms will not need to introduce an additional pause in the consumer journey. However, the consumer will still need to give their active consent that they wish to proceed with the investment.
  • Client categorisation: The FCA will clarify that, where consumers must provide their income/ net assets to show they are high net worth they can provide these to the nearest £10,000/£100,000 respectively. Additionally, the FCA will clarify what level of checks it expects firms to conduct on the information provided by the consumer in the investor declaration.
  • Appropriateness assessment: The FCA will modify its rules so that consumers must wait at least 24 hours before undertaking the appropriateness test again from their second assessment onwards.
  • Record keeping requirements: The FCA will only introduce requirements to record the metrics proposed in CP22/2 that relate to client categorisation and the appropriateness assessment. Furthermore, the FCA suggests that regulated firms consider the other metrics that the FCA proposed in CP22/2 when considering their monitoring obligations as high‑risk investment distributors under the Consumer Duty rules and guidance, including the consumer understanding outcome.
  • Implementation period: The FCA will extend the implementation period to six months, with the exception of the main risk warning rules (risk warning and risk summary, but not the personalised risk warning), which must be implemented within four months.
  • Date and time stamp: The FCA will allow an alternative format for the date and time stamp for approved promotions where it is not possible to include these due to the space available in the financial promotion being limited by a third‑party provider. In these circumstances firms must display the Firm Reference Number (FRN) of the approver, instead of the full name and date of approval. This text must link to a web page where the firm’s full name, and the date of the approval, must be displayed.
  • Competence and expertise requirements: The FCA will provide greater clarity that firms should have competence and expertise in the investment to which the financial promotion relates. A firm does not necessarily require competence and expertise in the day‑to‑day commercial activities of the company issuing the investment.

Cryptoasset promotions

The new rules will not apply to cryptoasset promotions.

The FCA explains that 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.


The rules related to risk warnings for financial promotions of high-risk investments will have effect from 1 December 2022.

All other rules will have effect from 1 February 2023.