Regulator Targets High Risk Investments Adverts

The financial regulator, the Financial Conduct Authority (FCA) has this week published a consultation document looking to review high risk investments, their marketing and the ease with which a consumer can invest without being aware of the higher risk nature.  The consultation paper proposes:

• Ban incentives to invest or ‘refer a friend’ bonuses.
• Firms marketing such investments must have the relevant expertise to produce and sign off marketing materials.
• Have better risk warnings.
• Have a ‘cooling off’ period known as a ‘period of contemplation’.
• Have procedures to reduce the risk of consumers investing in products they do not understand.
• Produce educational videos that consumers must watch before investing.
• Potential testing or questionnaires as a final check to ensure understanding of an investment product.

Comment

This could be quite far reaching.  Of course, investments like cryptoassets and spread betting will be caught up in these proposed reforms but we suggest a greater onus will be placed on financial firms to better check a consumers investment experience across the whole range of financial services and not just high risk investments.

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