Financial Promotions for high-risk investments

Sep 29th '23

The Financial Conduct Authority (FCA) outline the results of its investigation into how companies that provide restricted mass market investments (RMMIs) have complied with new guidelines on the client experience. The FCA provides examples of both excellent and bad practices for the larger industry to review and adjust as needed.


This will be of interest to:


  • firms promoting restricted mass market investments to retail consumers
  • firms promoting non mass market investments (NMMIs) to retail consumers
  • firms intending to promote relevant cryptoassets to UK retail consumers when the financial promotion rules for cryptoassets come into force


In August 2022, the regulator published PS22/10 – Strengthening financial promotion rules, which outlined new requirements for firms promoting high-risk investments (HRIs) to retail clients. The initial rules, requiring risk warnings on financial promotions, went live on 1 December 2022 and the remaining rules on 1 February 2023.


These regulations are crucial to minimizing consumer harm from purchasing HRIs that are out of line with their risk tolerance. In order to guarantee that consumers get high-quality financial promotions that empower them to make wise, informed investment decisions, FCA guidelines are meant to ensure that companies communicating with and approving financial promotions for HRIs do so to a high standard.


Following a review of the risk warnings of firms within the Peer-to-Peer and Investment Based Crowdfunding (IBCF) portfolios in December 2022 the FCA found that the level of compliance was far below the standard expected. This was reported in financial promotions quarterly data for Q1 2023. As a result, they looked more deeply at how firms had implemented the remaining rules from 1 February 2023.


Read in full, here.


Source: FCA


Need some promotional advice? If you want to understand more about how to make sure your marketing materials meet FCA standards, please click here.


Download: Financial promotion guide 


Get advice

The regulatory regime around financial promotions is ultimately designed to protect all parties. It’s in everybody’s interest to follow the rules, both to protect clients from risky investments and prevent firms inadvertently becoming professional enablers and falling foul of the law.


This is a complex area so if you have any doubts about whether or not your promotion comes within an exemption, the safest option is always to get it approved by an authorised firm or get specialist advice.


In the first instance, you could contact us for general guidance.


If you are unsure about a particular case or scenario, you could consult the FCA’s Handbook or seek advice directly from an expert on financial promotions.


Download: Financial Promotion Guide


LS Consultancy is ideally placed to support firms of all sizes and types with this Financial Promotions review.


Need some promotional advice? If you want to understand more about how to make sure your marketing materials meet FCA standards, please click here.


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