FCA urges firms offering high-risk investments to retail investors to review promotion practices

investmentweek.co.uk:

The FCA said it expects firms offering RMMIs to retail clients to consider these examples and any changes they need to make to their practices to meet its expectations and improve consumer outcomes.

In August 2022, the regulator published a 205-page policy document outlining its proposals to strengthen its financial promotion rules for restricted mass market investments (RMMIs) and firms approving financial promotions. 

The proposals were set to provide access to non‑traditional investments, such as Long-Term Asset funds (LTAFs), while still offering strong consumer protection by ensuring that firms communicating and approving financial promotions for these investments do so to a «high standard».

FCA launches consultation to broaden access to LTAF

The initial rules, which required risk warnings on financial promotions, went live on 1 December 2022, with the remaining rules effective from 1 February 2023. 

Since full rules went live, the FCA has reviewed the levels of compliance of a sample of 13 firms, with a focus on the five conditions set out in the rules: incentives to invest, cooling off period, risk warnings, client categorisation and appropriateness. 

Under ‘incentives to invest', the rules prohibit firms from communicating or approving a financial promotion that offers any monetary or non-monetary incentive to invest in HRIs, such as referral bonuses, free gifts or cashback to consumers for investing.

The regulator found that most firms reviewed had withdrawn any incentives to invest before the remaining rules went live, and, in many cases, these incentives had been wound down up to six months in advance of the deadline.  

FCA unveils final rules to extend LTAF distribution to retail investors

However, it also