The FCA has confirmed their final rules to permanently ban the mass-marketing of speculative illiquid securities (SIS), including speculative mini-bonds, to ordinary retail investors with effect from 1 January 2021. The Policy Statement and final rules can be read here.
A temporary ban was introduced in January 2020, following serious concerns that SISs were being promoted to ordinary retail investors who neither understood the risks involved, nor could afford the potential financial losses. Read our article regarding the temporary ban.
Following consultation, the ban is now being made permanent, extending it to cover similar listed securities where these are not traded frequently and introducing a small number of technical changes from the temporary ban.
This follows on from longstanding rules restricting marketing of non-mainstream pooled investments (NMPI) to ordinary retail clients.
Subject to some conditions, the exemptions to the restriction on promotions that previously applied in relation to NMPIs apply to the new ban too, namely clients who satisfy the definition of certified high net worth, certified sophisticated or self-certified sophisticated.
Whilst issuing these products is not a regulated activity, the FCA can take action when an authorised firm approves or communicates a financial promotion, directly advises on or sells these products. The FCA made use of its product intervention powers to introduce the 12 month restriction in January.
FG 21/3 – client objectives
Alistair MacDougall Compliance Drawdown, FCA, ML, Pension, Pension Transfer, PI, transfer
Following on from our previous articles on FG21/3, we will look today at another of the interesting areas covered by the guidance. It goes without saying that the guidance itself is helpful, reiterating and emphasising previous rules and guidance and clarifying some areas that were arguably fuzzy before. However, as well as the actual content, […]