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Volume XIII, Number 34


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FCA Publishes Discussion Paper on Strengthening Financial Promotion Rules for High-Risk Investments and Firms Approving Financial Promotions

On April 29, the Financial Conduct Authority (FCA) published a discussion paper (DP21/1) on strengthening its financial promotion rules for high-risk investments and firms approving financial promotions.

The FCA requested views on three areas where change could better protect consumers from harm:

  1. Classification of high-risk investments: The FCA’s classification of investments determines the level of marketing restrictions applicable to an investment. It is asking whether additional types of investments should be subject to marketing restrictions and what marketing restrictions should apply;

  2. Segmentation of high-risk investment market: Despite the FCA’s existing marketing restrictions, it is concerned that too many consumers continue to invest in inappropriate high-risk investments. It plans to strengthen its rules to further segment high-risk investments from the mainstream market and is seeking views on certain aspects of this; and

  3. Responsibilities of firms approving financial promotions: The FCA is considering whether there should be more requirements for firms approving financial promotion, under section 21 of the Financial Services and Markets Act 2000, to monitor such a promotion on an ongoing basis to ensure that it remains compliant.

The FCA will also be testing ideas informed by behavioral research to obtain a better insight on their effectiveness and this, along with feedback to DP21/1, will shape the changes the FCA intends to consult on later this year.

DP21/1 follows feedback to the FCA’s call for input (CFI) on consumer investments. The FCA will publish a full response to the CFI later in 2021, alongside its next steps on its wider consumer investments strategy and the summary of work completed to tackle harm in the consumer investment market in the financial year 2020/21.

Comments on DP21/1 are open until July 1.

The FCA discussion paper.

©2023 Katten Muchin Rosenman LLPNational Law Review, Volume XI, Number 127

About this Author

Carolyn H. Jackson, International Attorney, Katten Muchin law firm

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws...

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...