FCA vows to strengthen high-risk investment marketing
The City regulator has vowed to strengthen financial promotions for those investments which it categorises as ‘high-risk’.
In its business plan for 2021/22, the Financial Conduct Authority (FCA) said it will consult on changes to its financial promotions rules for high-risk investments, taking into account the feedback it receives after seeking views on the subject.
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The City regulator said its aim is to strengthen the classification of high-risk investments, segment the high-risk market and strengthen the responsibilities of firms that approve financial promotions.
The FCA said the Treasury has proposed a new regulatory gateway, which an authorised firm must first pass through before approving financial promotions for unauthorised persons.
Furthermore, it said it will shortly consult on proposals to streamline decisions about authorisation and specific supervisory and enforcement actions.
The regulator said it expects to intervene more often to prevent harm to consumers and market integrity, including, if needed, rejecting more applications for authorisation.
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“We are making changes to our financial promotions regime,” the FCA said in its business plan.
“We have put new procedures in place to fast-track our supervisory and enforcement response to breaches. We will proactively monitor firms that repeatedly breach our rules and investigate where breaches indicate more serious issues…
“We are improving how we detect, triage, disrupt and take enforcement action to help reduce fraud and harm. We are increasing public awareness and confidence through our ScamSmart campaign and our consumer alerts about unauthorised firms and individuals.
“We will also take assertive enforcement action where there is serious misconduct. We will continue our consumer campaigns on high-risk investments to help consumers make better decisions about their investments. We will continue proactive work with our partners.”
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The FCA said it is reviewing its compensation policy framework and will review aspects of its rules and the scope of Financial Services Compensation Scheme (FSCS) compensation payouts.
The regulator also said it will create a ‘consumer investment coordination group’ with the FSCS, the Financial Ombudsman Service and the Money and Pension Service and gather information on sharp practices so it can better target interventions.