U.K.’s regulatory watchdog, the Financial Conduct Authority (FCA) in the sphere of finances and banking, has released a fresh “discussion paper” on a financial promotion designed to safeguard retail investors. It seems like the FCA is specifically looking for the promotions of high-risk investments such as cryptocurrencies and the changes it can make to its rules in making consumers investment safer. FCA Proposes Cryptoassets Under Financial Protection Regime The FCA in its newest discussion paper highlights that it would like feedback on the classification of high-risk investments such as crypto assets, and peer-to-peer lending. Sheldon Mills, Executive Director, Consumers and Competition at the FCA says that the regulatory body is concerned about the fact that consumers are investing in high-risk investments they don’t understand, often resulting in a significant and unexpected loss: “We are concerned that too often consumers are investing in high-risk investments they don’t understand and can lead to significant and unexpected losses. We continue to address harm in this market through our ongoing supervisory and enforcement action but recognize more needs to be done. Our latest proposals would further reduce the risk of people taking on inappropriate, high-risk investments that don’t meet their needs.” The regulatory body proposed bringing crypto-assets into the scope of the financial promotion regime, to enhance consumer protection, adding: “The Treasury proposed bringing some crypto-assets into the scope of the financial promotion regime, to enhance consumer protection. The issues discussed in this paper may be relevant to promotions for crypto-assets to the extent they are brought within the scope of the financial promotion regime.” According to the document, the promotion of cryptocurrency services should be regulated to protect unqualified traders from being exposed to extra risks. Regulation on Crypto Promotion to be Strengthened The FCA emphasizes the level of marketing restrictions needed to apply to the product or firm; ways to segment high-risk investments from others; and ways to monitor if financial promotions are fair, clear, and not misleading. The document calls for all interested parties including crypto firms to join the discussion on financial service promotion. Hence, the FCA is inviting feedback on its discussion paper by 1 July 2021 where consult on rule changes will be made sometime later this year.
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