Topic: FCA to strengthen financial promotions rules to protect consumers.
Overview: The FCA is acting to address concerns about the ease and speed with which people can make high-risk investments by proposing a significant strengthening of its rules on how high-risk financial products are marketed. This is a central element of the FCA’s Consumer Investments Strategy, published in September 2021, which aims to give consumers the confidence to invest and reduce the number of people who are investing in high-risk products that are not aligned to their needs.
Under the proposed rules, the FCA would ensure firms that approve and communicate financial marketing have relevant expertise and understanding of the investments being offered, improve risk warnings on ads and ban incentives to invest, for example new joiner or refer-a-friend bonuses. Those looking to make certain high-risk investments would also be asked more robust questions about their knowledge and investment experience, after research found many consumers were investing without being aware of the risks.
Sarah Pritchard, Executive Director of Markets at the FCA, said: ‘Too many people are being led to invest in products they don’t understand, and which are too risky for them. People need clear, fair information and proper risk warnings if they are to invest with confidence, which is the central aim of our consumer investments strategy.’
Topic: FCA confirms approach to European firms temporarily operating in the UK
Overview: European firms wishing to remain in the temporary permissions regime (TPR) need to meet the FCA’s standards to continue operating in the UK. The regime was designed to ensure that European firms operating in the UK via a passport when the Brexit transition period ended could continue operating temporarily while they seek full authorisation in the UK.
The TPR should only be used by firms who want to operate in the UK in the long-term and meet the standards to do so.
Firms may be asked to stop undertaking new business or could be removed from the TPR if they miss their ‘landing slot’, fail to respond to mandatory information requests, have no intention in applying for full authorisation, or if their authorisation application is refused.
The FCA has already cancelled the temporary permissions of 4 firms, who, despite multiple opportunities, did not respond to mandatory information requests.
Firms that have had their permissions cancelled can no longer conduct regulated business in the UK and may be committing a criminal offence if they do so.
Emily Shepperd, Executive Director of Authorisations at the FCA, said:
‘The UK is open for business, but not to firms who do not meet our regulatory expectations. We expect firms operating under the regime to be responsive to our requests for information, and that are coherent in their business planning. We will continue to act against firms that fail to meet our standards.’