The UK’s financial watchdog has vowed to crack down on those using “unclear” and “misleading” information to sell risky investments after bringing in tough new rules around the marketing of high-risk financial products.
The Financial Conduct Authority’s (FCA’s) “stronger” rules require firms to use clearer and more prominent risk warnings, and ban companies from offering various incentives, such as “refer-a-friend bonuses,” to market high-risk investment products.
Under the new rules, companies will also be required to carry out better checks to ensure the investment products they are offering match the needs of their customers. Firms will also be required to have the appropriate expertise in place, in order to approve or issue marketing materials.
The tougher rules come as the FCA pushes forwards with plans to take a “more assertive and interventionist approach” towards tackling poor quality financial promotions, with a view to reducing the potential for consumer losses.
However, the FCA’s new rules will not apply to crypto products, the watchdog said, as it set out plans to introduce similar regulations around the marketing of cryptocurrency investments following the introduction of legislation to bring crypto into the regulator’s remit.
Sarah Pritchard, Executive Director, Markets 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.”