FCA sets out roadmap to expand consumer access to investments

The FPO contains exemptions that broadly permit unauthorised persons to promote equity and debt in unlisted companies to high-net-worth individuals and self-certified sophisticated investors, taking them outside the FCA's rules, including the requirement for promotions to be clear, fair and not misleading.  In the FCA's behavioural experiment, only 16% of participants could legitimately self-certify as either high net worth or sophisticated, yet 53% of the control group self-certified having simply been presented with the criteria, raising serious concerns about consumers expecting support or compensation when suffering losses that a sophisticated investor might have anticipated.

Legislative change is required to reduce the number of consumers being inappropriately opted out of protections, whether that is raising the level of the thresholds, removing self-certification or removing the exemptions in their current form, and maintaining the status quo means these harms will continue, leaving consumers susceptible to potentially misleading promotions and inappropriate investments, with few routes for recourse.  The FCA will continue to engage with HM Treasury to address these concerns, as it lacks the powers to address them unilaterally.

Only a minority of respondents stated that the current regime is broadly appropriate and effective at classifying risk, most respondents said the current categories are inconsistently applied, too prescriptive and too broad.  In response, the FCA will begin to review its high-risk investment categorisation, working with stakeholders to assess the harm caused by current inconsistencies, what alternatives would look like and whether and why they could lead to better outcomes.

CFDs are subject to product-specific promotion and distribution rules in COBS 22, such as leverage limits and negative balance protections, reflecting the risks of leverage, short-term trading and complexity, whereas Leveraged ETPs, which track the performance of underlying assets and amplify gains and losses, have daily resetting periods and are designed for short-term trading, but are not subject to the same requirements.  Some products such as binary options are currently banned for retail access, and the FCA considers the risks of gambling-like products to be different from investment risk, committing to keep its regulatory framework under review as products develop that exploit gambling-like behaviours.

Respondents reported that DEPs such as copy trading, push notifications, rewards-based nudges and social comparison features such as trader leaderboards can make the underlying value proposition of speculative products less transparent and confusing for consumers.  Copy-trading is identified as particularly harmful, as consumers have the impression it is a simple and safe way to invest when in fact it can expose them to speculative products they do not fully understand.

The feedback received reflects that risk warnings are broadly applied by firms out of caution, place too much emphasis on volatility and capital loss rather than the potential rewards of investing, and consumers encounter the same or similar warnings repeatedly, meaning that even for mainstream and suitable products, consumers may overestimate the risks of investing.  The FCA plans to consult further on its rules and guidance around risk information in financial promotions of mainstream investments in its Review of Financial Promotion Rules for Mainstream Investments in H1 2027, along with consumer research to support its proposals.

Most respondents support the concept of appropriateness assessments but called for reform and clarification, with the "non-complex" definition in COBS 10 and COBS 10A, derived from EU law, repeatedly noted as a challenge that is being applied inconsistently, sometimes not applied where necessary and sometimes applied too stringently.  The FCA will take forward a review to deepen its understanding of how this stage of the consumer journey works in practice, and explore whether and how changes could promote better consumer outcomes, with this work informing any policy proposals taken forward.

Respondents recommended that if a fractional share is structured so that its risks are similar to the underlying share, the fractional share should be equally accessible, and that it should be clear to consumers what structure they are buying and who the issuer is.  In September 2026 (CP26/32) the FCA consulted on the application of its rules to fractional shares based on their risk profile, but confirmed it does not consider derivatives to be the same as fractional shares, and that exposure offered via a derivative is riskier than acquiring an interest in a whole share, with stricter safeguards required.

Respondents broadly agreed that multi-client managed MPS are understood from a consumer perspective as off-the-shelf investment propositions akin to packaged products, and that aligning model portfolio disclosures with the CCI regime would promote consistency and consumer understanding when choosing between multi-asset funds and multi-client managed MPS.  The FCA has begun its multi-firm review on how firms manufacturing MPS are achieving good outcomes for consumers under their Consumer Duty obligations, assessing portfolio construction, asset selection, risk ratings, management of conflicts of interest, rebalancing practices and oversight structures, with findings expected by Q1 2027.