Contingent convertible instruments (commonly known as CoCos) are hybrid capital securities that absorb losses when the capital of the issuer falls below a certain level.
In the first use of new consumer protection powers, the FCA has introduced a temporary restriction on firms from distributing CoCos to the mass retail market. The restriction will apply from 1 October 2014 to 1 October 2015. In the interim the FCA will work with issuers to ensure that the sale of these instruments is appropriately targeted.
In September the FCA is planning to publish a Consultation Paper about proposed permanent rules on CoCos. Following consideration of feedback, the FCA aims to publish a Policy Statement in Q2 2015, with the final rules to be scheduled to take effect on 1 October 2015, when the temporary product intervention rules expire.
View FCA restricts distribution of CoCos to retail investors, 5 August 2014
View Restrictions in relation to the retail distribution of contingent convertible instruments, 5 August 2014