The FCA has opened its consultation on changes it is proposing to make to protect consumers from harm when investing in high risk investments; a key part of its Consumer Investments Strategy (published 15 September). 'High-risk investments' include investment based-crowdfunding, peer-to-peer agreements and other non-readily realisable securities, non-mainstream pooled investments and speculative illiquid securities. Notably, cryptoassets will also be included when they are brought within the financial promotion regime.
With new investors being driven by social and emotional factors, the FCA acknowledges that financial promotions may meet existing requirements to be clear, fair and not misleading but they might not be enough to ensure that the consumer understands when the underlying investment does not meet their needs.
The consultation follows, and is to be considered alongside, the FCA's recent interventions in this space including, for example, its banning of mass-marketing of speculative illiquid securities, and the Treasury's confirmation that promotions for cryptoassets will be brought within the financial promotions regime.
Key dates for the consultation:
- 23 March 2022 - consultation closes
- Summer 2022 - expected publication of the Policy Statement and Handbook rules
Firms will have 3 months from the publication of the final rules to comply with the new requirements for the consumer journey and for section 21 approvers (i.e. authorised firms who approve financial promotions for unauthorised firms), except where changes relate to cryptoasset promotions in which case the rules will apply from the date qualifying cryptoassets are brought within the financial promotion regime.
In this Consultation Paper, we propose changes to: our classification of high-risk investments the consumer journey into high-risk investments strengthen the role of firms approving and communicating financial promotions apply our financial promotion rules to qualifying cryptoassets.