The Financial Conduct Authority (FCA) is introducing new guidelines for promoting high-risk investments. While crypt is classified as high-risk, the new rules will not apply to the promotion of crypto assets.
The FCA is waiting for the UK government’s decision on how to legistlate cryptocurrencies but highights similar rules will apply to crypto-related products. The new UK PM will only be announced on 5 September 2022.
Comanies will be required to clarify the risks in investing in an instrument and cannot offer incestives such as refer a friend, which are banned under the new rules. 4,226 ads were amended or withdrawn following the FCA’s intervention.
Sarah Pritchard, Executive Director 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.”
The FCA is asking for feedback on its new rules by 10th October 2022. The final rules will be introduced at the beginning of 2023.
Enhancing the Client’s Journey
The FCA is anticipating that 300 firms will be affected by its new rules in the crypto space, which will inturn affect over 2 million consumers / security holders.
source: FCA
The FCA wishes to enhance the risk warnings. Inducments to invest (such as refer-a-friend) to be banned, personalized risk warning pop-ups for new investors with the company must be displayed.
Companies will be required to regularly check the compliance of approved promotions, ensuring they are inline with the FCA. Evidence declerations will be also be required.
source: FCA
Below is an example how the new rules are implemented. The 24hr cooling period is to prevent any irrational decisions that are oftem emotionally driven.
If a retail investor lured by high returns due to his financial conditions, the cooling period may improve the decision-making process from the consumer’s angle.
source: FCA
The UK regulator will also ban mass marketing to retail investors for Non-Mass Market Investments (NMMI). Mini-bonds or pooled investments in a fund that has not been authorized by the FCA are considered as NMMI.
All of the new rules are available on the FCA’s website.
The Financial Conduct Authority (FCA) is introducing new guidelines for promoting high-risk investments. While crypt is classified as high-risk, the new rules will not apply to the promotion of crypto assets.
The FCA is waiting for the UK government’s decision on how to legistlate cryptocurrencies but highights similar rules will apply to crypto-related products. The new UK PM will only be announced on 5 September 2022.
Comanies will be required to clarify the risks in investing in an instrument and cannot offer incestives such as refer a friend, which are banned under the new rules. 4,226 ads were amended or withdrawn following the FCA’s intervention.
Sarah Pritchard, Executive Director 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.”
The FCA is asking for feedback on its new rules by 10th October 2022. The final rules will be introduced at the beginning of 2023.
Enhancing the Client’s Journey
The FCA is anticipating that 300 firms will be affected by its new rules in the crypto space, which will inturn affect over 2 million consumers / security holders.
source: FCA
The FCA wishes to enhance the risk warnings. Inducments to invest (such as refer-a-friend) to be banned, personalized risk warning pop-ups for new investors with the company must be displayed.
Companies will be required to regularly check the compliance of approved promotions, ensuring they are inline with the FCA. Evidence declerations will be also be required.
source: FCA
Below is an example how the new rules are implemented. The 24hr cooling period is to prevent any irrational decisions that are oftem emotionally driven.
If a retail investor lured by high returns due to his financial conditions, the cooling period may improve the decision-making process from the consumer’s angle.
source: FCA
The UK regulator will also ban mass marketing to retail investors for Non-Mass Market Investments (NMMI). Mini-bonds or pooled investments in a fund that has not been authorized by the FCA are considered as NMMI.
All of the new rules are available on the FCA’s website.
