18th November 2022
The Financial Conduct Authority (FCA) consulted earlier this year on strengthening its financial promotion rules for high risk investments, including cryptoassets, and for firms approving and communicating financial promotions. Walker Morris financial services experts Jeanette Burgess and Andrew Northage considered the proposals for reform of the FCA financial promotion regime in their earlier briefing.
Now that the FCA has published its policy statement, Jeanette and Andrew take a look at what’s changed between the proposals and the final rules, and the next steps for firms.
As we explained in our earlier briefing, the FCA consulted on the following:
The FCA says that the changes will be directly relevant to section 21 approvers (authorised firms which approve financial promotions for unauthorised persons), regardless of whether the investments are high risk; issuers of non-mainstream pooled investments, speculative illiquid securities and non-readily realisable securities ; investment-based crowdfunding platforms and other intermediaries distributing high risk investments to consumers ; loan based peer-to-peer platforms; and trade bodies for these last two sectors.
A key change is the implementation period. The rules were originally planned to come into force on 1 December 2022. Now, only the main risk warning rules (standard risk warning and risk summary, but not the personalised risk warning) will come into force on that date. The rest will come into force two months later, on 1 February 2023, giving firms some additional time to prepare.
The FCA has made several targeted changes to its proposals in response to stakeholder feedback. These changes are helpfully set out in Table 1 starting on page 8 of the policy statement.
The FCA has decided to allow alternative risk warnings in some circumstances. These are summarised in Figure 4 on page 20.
The FCA will publish final rules for cryptoasset promotions once the Treasury has made the relevant legislation to bring qualifying cryptoassets in scope of the financial promotion regime.
Affected firms should familiarise themselves with the new rules and make sure they have the processes in place to comply in time.
If you have any queries about the changes and how they will affect you, or need advice or assistance with implementing them in your business, please contact Jeanette or Andrew, who will be very happy to help.