The Economic Secretary to the Treasury & City Minister, John Glen, announced the publication of two consultation papers today. The consultations contain proposals to increase the oversight of financial promotions issued by unauthorised firms, and to bring the promotion of certain types of cryptoassets under Financial Conduct Authority (FCA) regulation for the first time.
The proposals aim to combat the problem of misleading advertising or a lack of suitable information, which can expose potential investors to a level of risk they are not prepared for.
John Glen stated that, “we want to put more protections in place around such financial promotions, including the promotion of cryptoassets, while continuing to ensure people have access to a wide range of products on the market.”
Presently unauthorised financial services firms are able to promote their products by having their financial promotions approved by an authorised firm. But this hasn’t always served as a sufficient safeguard given the breadth and variety of financial product offered.
Similarly, the financial promotion of cryptoassets also, at present, does not benefit from sufficient safeguards. These financial promotions are completely unregulated, notwithstanding their tendency to target retail investors.
Therefore in order to ensure the continuing proliferation of financial promotions that are fair, clear and not misleading, the government is proposing that:
- Authorised firms will now have to obtain specific FCA consent to approve the financial promotions of unauthorised firms; and
- The perimeter of the financial promotions regime be expanded to include certain types of cryptoasset.
Both consultations run from 20 July until 25 October 2020.
To view the text of either of the consultations, please click the relevant link below: