The FCA has updated their approach to high-risk investments by streamlining their COBS 4 regulations. They now differentiate between “Restricted Mass Market Investments” and “Non-Mass Market Investments”. “Restricted Mass Market Investments” are those available to wide audiences which have specific restrictions and require clear risk warnings. While “Non-Mass Market Investments” are deemed unsuitable for the general public and can only be promoted to a small group of sophisticated investors.
Additionally, the FCA is enhancing the process consumers undergo when entering high-risk investments. This will include measures such as clearer risk warnings, a ban on incentives to invest, the introduction of deliberate delays to encourage more thoughtful decision-making, better client categorization, and more rigorous suitability assessments.
To further ensure the integrity of financial promotions, the FCA is strengthening the role of firms that approve and communicate such promotions. These firms must now meet new requirements, including proving they have the necessary competence and expertise to promote the specific products. The role of Section 21 (s21) approvers will also be reinforced with additional responsibilities.
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