Strengthening the financial promotion for high-risk investments

Strengthening the financial promotion rules for high-risk investments and firms approving financial promotions (PS 22/10)


The FCA continues to have concerns about the investors’ understanding of the risks involved in high-risk products. As part of its wider Consumer Investments Strategy, the FCA is seeking to reduce the number of consumers who are investing in high-risk products that are not aligned to their risk appetite.

The last year has seen ever more regular intervention by the FCA in the financial promotions of high-risk products, with the FCA indicating that they will continue to intervene moving forward. The enhanced rules published in PS22/10 build on these FCA aims and activities. Interestingly, the FCA  points out that work in this area is even more important in the current climate of inflation and the rising cost of living, as investors may be looking for higher returns while, at the same time, being less able to absorb potential losses.

The FCA is hopeful that by 2025, there will be a 50% reduction in the number of consumers with low risk tolerance or vulnerability characteristics investing in high-risk investments. Such a statement is indicative of the fact that the new measures will have a substantial and lasting impact on retail investment markets over the coming years.

Key points

Enhanced financial promotion requirements for high-risk investments

Classification of high-risk investments: The FCA is going ahead with the proposal in the consultation to rationalise its rules in COBS 4 under the terms “Restricted Mass Market Investments” (RMMI), promotions of which to retail investors are subject to certain restrictions, and “Non-Mass Market Investments” (NMMI), the marketing of which to retail investors is banned.

The consumer path with regard to  high-risk investments:

  1. Risk warnings: The FCA is going ahead with requiring the risk warnings for all high-risk investments (other than chapter 15 listed shares) to state that investors could lose all their money invested. However, in response to feedback, the FCA is providing for variations on some other aspects of the risk warning. Firms making use of this caveat will need to show the rationale for their use (e.g. legal advice)
  2. Risk summaries: There are prescribed risk summaries, which should take about two minutes to read. The FCA’s final rules allow firms to diverge from these “if they have a valid reason for doing so”.
  3. Banning incentives to invest: The FCA is going ahead with its proposal to ban financial promotions for high-risk investments from containing any monetary or non-monetary benefits (such as “refer a friend” or new joiner bonuses) to incentivise investment.
  4. Cooling off period: The FCA is going ahead with its proposals to introduce a (minimum) 24 hour cooling off period for first time retail investors with a firm, meaning that consumers cannot receive a financial promotion for a NMMI, or a direct offer financial promotion (DOFP) for a RMMI, unless they reconfirm their request after waiting (at least) 24 hours.
  5. Personalised risk warnings: For first time investors with a firm, the FCA is also introducing a requirement for firms to show a personalised risk warning.
  6. Client categorisation: Retail clients are required to self-certify that they fulfil the criteria for receiving financial promotions for high-risk investments.
  7. Appropriateness test: make these assessments more robust, prevent firms from coaching investors to pass them, and making them less easy to fudge.
  8. Record keeping requirements: The FCA is requiring firms to collect several new metrics of the customer journey to help the FCA monitor the effectiveness of the new rules, both initially and over time.

Connection to the new Consumer Duty

Firms will need to be aware of the huge correlation between the new financial promotion rules and the new Consumer Duty (in particular all enhanced requirements).*


The new rules do not currently cover cryptoasset promotions. However, firms should be cognisant as to when cryptoassets fall under the FCA remit.

Firms approving and communicating financial promotions

Firms will need to consider and demonstrably show:

  1. Name of the approver and date of approval
  2. Competence and expertise
  3. Ensure that promotions remain compliant
  4. Compliance with appropriateness rules
  5. Conflicts of interest requirements

As a footnote on the approval and communication of financial promotions, these requirements may require firms to employ additional resource.

The Timetable



1 December 2022

Main risk warnings and risk summaries (with the exclusion of personalised risk warnings) apply


1 February 2023

Additional enhancements
(as above)

Firms should be aware of their ever-increasing responsibilities and obligations.  This is especially relevant regarding retail customers. The overlap between various new FCA initiatives and released policy statements and rules is impossible to ignore. Firms are strongly encouraged to address their requirements.

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