PS22/10: Strengthening our financial promotion rules for high-risk investments and firms approving financial promotions

Read PS22/10 (PDF)

What we are changing

We are making changes in the following areas:  

• Our classification of high-risk investments. We are rationalising our rules in COBS 4 under the terms ‘Restricted Mass Market Investments’ and ‘Non-Mass Market Investments’.  
• The consumer journey into high-risk investments. We are implementing a package of measures to strengthen the consumer journey such as: strengthening risk warnings, banning inducements to invest, introducing positive frictions, improving client categorisation and introducing stronger appropriateness tests.  
• Strengthening the role of firms approving and communicating financial promotions. We are introducing a package of measures to strengthening the role of a section 21 (s21) approver. We are also introducing a rule that firms communicating financial promotions must have the relevant competence and expertise in the product being promoted. 

Who this affects

This consultation will be directly relevant to:   

• consumers investing, or who are considering investing, in high-risk investments  
• authorised firms which approve financial promotions for unauthorised persons (section 21 approvers), whether for high-risk investments or otherwise   
• issuers of non-mainstream pooled investments, speculative illiquid securities and non-readily realisable securities   
• investment-based crowdfunding (IBCF) platforms and other intermediaries distributing high-risk investments to consumers   
• loan based Peer-to-Peer (P2P) platforms   
• trade bodies for the IBCF and P2P sectors  

The final rules in this document will also be of interest to:  

• firms operating in the cryptoasset sector and trade bodies for these firms  
• any authorised firm in the consumer investments sector  
• investment companies, and trade bodies for this sector   
• issuers of other types of investments   
• financial advisers  
• firms managing a Long-Term Asset Fund  

Next steps  

Rules related to our main risk warnings for financial promotions of high-risk investments will have effect from 1 December 2022. All other rules will have effect from 1 February 2023.

Firms will need to comply with these rules from the applicable dates. We will closely monitor implementation of these rules and will act where we see firms breach them.

Cryptoasset promotions are currently outside our remit. We will publish our final rules for cryptoasset promotions once the relevant legislation to bring qualifying cryptoassets within the financial promotions regime has been made. 

21 December 2022 update: Error identified in Part 1 of the PS22/10 rules for financial promotions of high-risk investments (until 1st February 2023)

An error has been identified in Part 1 of the Financial Promotions and High-Risk Investments Instrument 2022 (Instrument FCA 2022/33) which was published in PS22/10. 

Part 1 of the instrument amends the Handbook with effect from 1 December 2022 to insert new rules relating to risk warnings in COBS 4.12.15R-4.12.29G and COBS 4.14.8R-4.14.8MG. Those new rules should have contained an exclusion for 'excluded communications' (as defined in the Glossary) but that exclusion was omitted. With effect from 1 February 2023, the rules above will be replaced by the rules contained in Part 2 of the instrument which do contain the exclusion for 'excluded communications'.

Consistent with the application of the rules from 1 February 2023, the risk warning required by COBS 4.12.15R-4.12.29G and COBS 4.14.8R-4.14.8MG is not intended to apply to excluded communications.

November 2023 update

We updated paragraph 3.1 of the policy statement to clarify that half of the proposals received net positive feedback during consultation, instead of most of the proposals.