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UK's FCA sets out final policy changes to strengthen financial promotion rules

  • United Kingdom
  • Financial services and markets regulation
  • Financial services - Asset managers and funds



The FCA’s policy statement PS22/10 “Strengthening our financial promotion rules for high‑risk investments and firms approving financial promotions” sets out final policy and handbook rules for high-risk investments subject to the financial promotion rules and for firms communicating and approving financial promotions.  

The release of PS22/10 follows the FCA’s earlier consultation, CP22/2 “Strengthening our financial promotion rules for high risk investments, including cryptoassets”.  

The changes introduced by PS22/10 fall into three distinct categories:

  1. The FCA’s classification of high-risk investments;
  2. The consumer journey into high-risk investments; and
  3. Strengthening the role of firms approving and communicating financial promotions.

The rules

Classification of high-risk investments

The FCA responded to feedback that its existing marketing restrictions are considered to be difficult to navigate and that it can be challenging to understand what restrictions apply. High-risk investments will now be classified into three categories, allowing for clearer interpretation of the marketing rules. Categorisation does not change the level of applicable marketing restrictions.


Financial promotion restrictions

Application of Direct Offer Financial Promotion (“DOFP”) restrictions

Readily Realisable Securities (RRS)


Listed or exchange traded securities, e.g. shares or bonds traded on LSE.


No marketing restrictions.

No restrictions.

Restricted Mass Marketing Investments (RMMI)


Non-Readily Realisable Securities (NRRS), e.g. shares or bonds in a company not listed on an exchange.


Peer 2 Peer (P2P) Agreements.


Qualifying cryptoassets.


Mass marketing allowed to retail investors subject to certain restrictions.

RMMIs cannot be accessed by retail investors but can be accessed by certified high net worth, certified sophisticated or certified restricted investors with a personalised risk warning, a 24 hour cooling off period, investor assessment, declaration forms and appropriateness testing.

Non Mass Marketing Investments (NMMI)


Non-Mainstream Pooled Investments (NMPI), e.g. pooled investments in an unauthorised fund.


Speculative Illiquid Securities, e.g. speculative mini-bonds.


Mass marketing banned to retail investors.

As above for RMMIs, with additional preliminary suitability assessment requirements.

The DOFP rules will apply in relation to RMMIs and NMMIs.

Non Readily Realisable Securities (NRRS) and Peer to Peer (P2P) agreements are currently permitted to be mass marketed to retail consumers, subject to certain restrictions.  Non Mainstream Pooled Investments (NMPI) and Speculative Illiquid Securities are not permitted to be mass marketed.  NMPIs include units in unregulated collective investment schemes, units in a qualified investor scheme, certain securities issued by special purpose vehicles and traded life policy investments. 

Under the new categorisations, NRRS and P2P agreements will be RMMIs.

In consultation paper 22/14 “Broadening retail access to the long-term asset fund”, released at the same time as PS22/10, the FCA proposed to recognise LTAFs as RMMIs, rather than as NMMIs.  This reflects the intention to widen access to retail investors and allows for mass marketing of LTAFs.

The consumer journey into high-risk investments

In CP22/2, the FCA outlined its concern that consumers are able to access high risk investments without understanding the risks involved, despite marketing restrictions imposed upon providers.

PS22/10 introduces the package of changes proposed by CP22/2, including:

  • Strengthening risk warnings

    The following risk warning must be included on all financial promotions for RMMIs and NMMIs:

    “Don’t invest unless you’re prepared to lose all your money invested. This is a high‑risk investment. You could lose all the money you invest and are unlikely to be protected if something goes wrong. Take 2 mins to learn more.”

    The link at “take 2 mins to learn more” will need to be a link to the standard summary of risk information for a particular investment type.

  • Banning inducements to invest

    The FCA will ban promotions for high‑risk investments from containing any monetary and non‑monetary benefits that incentivise investment activity, such as “refer a friend”, cashback, free gifts or new joiner bonuses. This is modelled on a similar ban that applies to the marketing and distribution of Contracts for Difference (see COBS 22.5.20).

    The final rules exempt products and services produced or provided by the issuer of, or borrower under, the relevant investment, following feedback from the crowdfunding sector about the impacts on shareholder benefits.

  • Introducing “positive frictions”

    Positive frictions will include:

    • a minimum 24 hour cooling off period for first time investors with a firm. This means that firms must wait at least 24 hours before showing the consumer the financial promotion (for NMMIs) or the DOFP (for RMMIs) (although firms may proceed with their onboarding processes and appropriateness tests during this period); and
    • a personalised and prominent risk warning pop‑up (or equivalent) for first time investors with a firm which must contain a “take 2 mins to learn more” hyperlink to the standard summary of risk information for the relevant investment type. For RMMIs, this would appear before a DOFP could be communicated. For NMMIs, this would appear before the financial promotion could be communicated (assuming all necessary conditions for the financial promotion to be lawfully communicated are satisfied). Closed-ended investment funds will be exempt from this requirement.
  • Improving client categorisation

    An evidence component will be introduced to investor declaration forms which will require consumers to state why they meet the relevant criteria (for example, stating their income to show they are high net worth).

    This follows the behavioural testing which found that adding this evidence component reduced rates of self‑certification by 36%.

    The declaration will also be simplified using ‘plain English’ and to add a ‘none of the above’ option to the declarations.

    LTAFs will fall within the scope of this change, to avoid duplicate versions of the investor declaration forms being included in the FCA Handbook.

  • Stronger appropriateness tests

    • Any order or application for a RMMI which results from a DOFP may not be fulfilled unless the RMMI has been assessed as being appropriate for the client.
    • Where an RMMI is assessed as being inappropriate for a retail client, the client cannot be told of the particular answers that led to that assessment (although a client may be informed of broad reasons for the assessment) and any further assessment must be based on different questions.  If an RMMI is assessed as being inappropriate for a retail client on two consecutive occasions, the firm cannot undertake any further re‑assessment of appropriateness for at least 24 hours.
    • If investment in a RMMI is assessed as being inappropriate for a retail client, they may be informed of the option to re-apply but should not be encouraged to do so.  In the FCA’s view, any such communication should not be persistent or persuasive in nature. It should not tell or suggest to the consumer what to do in this scenario, or place any other form of pressure on the consumer such as giving them a time limit. The FCA also states that firms should ensure that the consumer understands what the conclusion of the appropriateness test means, so that they can then make an informed decision on whether to undergo the assessment again. Firms should also consider pointing the consumer towards educational material, so that they can improve their understanding of the risks if they are still interested in continuing.

These rules will apply to all categories of retail client for RMMIs, unless the investor is receiving advice.

Strengthening the role of firms approving and communicating financial promotions

The new rules strengthen the role of firms which approve financial promotions (‘s21 approvers’).

S21 approvers will be required to meet high standards and have the relevant expertise in the promotions they approve.  These measures are aimed at both helping the consumer to determine whether a promotion has been approved (and which firm provided approval), as well as helping the FCA in its enforcement efforts against firms in breach of its rules.

The changes are as follows:

  • Strengthening the rules relating to a firm having the relevant competence and expertise in the type of investment being promoted, when communicating or approving a financial promotion.  Currently, the rules do not contain a specific restriction on firms approving or communicating financial promotions for products or services where they lack relevant expertise.  The new rules require firms to self‑assess whether they have the necessary competence and expertise in an investment product or service before approving or communicating a relevant financial promotion.  If a firm wishes to communicate a promotion but does not have the relevant competence and expertise in‑house, they must find an authorised person that does to act as the s21 approver.
  • Approvers must play a more active role in ensuring approved promotions remain compliant for the lifetime of the promotion – not just at a single point in time.  This is intended to move s21 approvers away from a ‘once and done’ approach.  An approver will need to take reasonable steps to monitor the continuing compliance of approved promotions to consider whether, amongst other factors, there have been any changes which may affect whether the promotion continues to be clear, fair and not misleading, including consideration of the ongoing commercial viability of the proposition described in the promotion.
  • Approver firms will be required to obtain attestations of ‘no material change’ from clients with approved promotions every 3 months, for the lifetime of the approved promotion.  These attestations are intended to serve as an early warning to s21 approvers of any changes or issues with approved promotions. Approvers must consider any changes disclosed in an attestation and, where necessary, withdraw approval as soon as reasonably practicable.
  • Approvers must ensure compliance with the appropriateness rules.  A s21 approver’s responsibility for ensuring compliance with the appropriateness rules is not limited to a one‑off assessment on approval of the promotion and s21 approvers must check the compliance of appropriateness tests periodically, throughout the lifetime of a promotion.  
  • Existing ‘conflicts of interest’ obligations will be extended to firms approving financial promotions for unauthorised persons and to firms confirming compliance of a financial promotion for an authorised firm. S21 approvers must identify and prevent or manage any conflicts of interest relevant to their s21 approval activity. 
  • Preliminary suitability assessments for NMMIs. Firms approving financial promotions for NMMIs must undertake a preliminary assessment of suitability before approving a promotion to high net worth or sophisticated investors.  

A note on cryptoassets

PS22/10 itself doesn’t deal with the promotion of cryptoassets, as these are currently outside the FCA’s remit.  However, the Treasury is committed to legislating in order to bring certain cryptoassets into the scope of the financial promotion regime.  In anticipation of this, the FCA set out its proposed rules for cryptoasset promotions in CP22/2 and proposes to treat qualifying cryptoassets as RMMI.  The final rules relating to cryptoassets will be issued once relevant legislation is made by the Treasury.

Impact and timing

The changes clarify and build upon existing FCA rules and introduce a greater level of disclosure. The measures are designed to improve regulatory protection of retail consumers. They are intended to ensure that as retail access to high risk investments is expanded to include LTAFs and crypto assets, a strengthened model is in place. The new rules in relation to cryptoassets, when introduced, will significantly affect the ability to market cryptoassets to retail investors.

Most of the new rules will take effect from 1 February 2023. The new requirements for risk warnings for financial promotions of high risk investments will apply from 1 December 2022.

The non-Handbook guidance will be published on the FCA website and apply from 1 February 2023.

How Eversheds Sutherland can help

Firms approving financial promotions relating to high-risk investments should consider how to implement the stricter disclosure requirements set out by the FCA. Although firms marketing cryptoassets are not currently affected, they should remain alert to the proposed rules on cryptoasset promotions. Please visit our Crypto hub for more information.

For more information on the policy and how this might impact you, please get in touch with your usual Eversheds Sutherland contact or the contacts listed below: