FCA finalises firmer rules on tackling high-risk investment adverts

The FCA has finalised stronger rules to help tackle misleading adverts that encourage investing in high-risk products.

Under the firmed-up rules, companies approving and issuing marketing must have appropriate expertise, with companies who are marketing some kinds of high-risk investments needing to conduct better checks to ensure consumers and their investments are well matched.

Businesses will also need to use clearer and more prominent risk warnings and certain incentives to invest – such a ‘refer a friend bonuses’ are now banned.

The FCA claims these new rules build upon its more assertive and interventionist approach to tackling poor financial promotions, reducing the potential for unexpected consumer losses.

The organisation said it has intervened in significantly more financial promotions to prevent harm, with 4226 adverts amended or withdrawn after FCA intervention in the year to end of July 2022.

The new rules will not apply to the promotion material of cryptoassets.

FCA executive director of markets Sarah Pritchard said, “We want people to be able to invest with confidence, understand the risks involved, and get the investments that are right for them which reflect their appetite for risk.

“Our new simplified risk warnings are designed to help consumers better understand the risks, albeit firms have a significant role to play too. Where we see products being marketed that don’t contain the right risk warnings or are unclear, unfair or misleading, we will act. This is even more important now because increases in the cost of living could prompt people to chase higher investment returns which may prove risky.”

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