A busy Update this week; looks like the holiday hangover period is well and truly done for. It may not be the only thing that’s done for this week, but entertainment is going to have to wait.

The big news this week is the FCA’s new Consultation Paper (CP22/2, which must equal CP11, no?). This CP concerns strengthening the financial promotions rules for high risk investments. Now, you’re thinking that it sounds Dull City, Kingston Upon Dull, or just Dull, but you’re wrong and here’s why.

The retail investment sector works at two speeds. The first is the bumbling speed we know and love – don’t we? – where relatively vanilla investments are heavily regulated and consumer protection is baked in at a number of points in the journey. The second is super whizzy and fast and extraordinarily dangerous and has very few checks and balances in it. It is a perverse consequence of the way regulation works that the most potentially toxic and value destructive investments carry the least regulatory overhead.

You could make an argument that financial planners shouldn’t care about stuff they don’t get involved in, because where do you stop? Should planners care professionally about shrinkflation in chocolate bars? Which Scream movie is best? Whether Gibson’s Murphy Lab artificial ageing process is against nature and all that is holy? (the answers, by the way, are ‘yes because modern life is rubbish’, ‘2’ and ‘absolutely, is nothing sacred?’)

This area, though, matters. With the FCA pointing out that up to half of investors in crypto exhibit signs of financial vulnerability and that investors in high risk investments generally were 37% more likely to exhibit these signs than the market as a whole (section 4.9 in CP22/2). Every time something goes wrong – and it does – those in the products, their friends, the media and even the mainstream investment industry further reinforces the idea that there is some kind of equivalence between the two speeds, and that’s wrong. One is investing; the other is gambling, which can be fun but probably isn’t a great strategy for your SIPP. To put it another way, the pie for the sensible stuff gets smaller and the potential for genuine detriment increases – paragraph 3.2 in the CP points out that investors display a preference for speculative minibonds over stocks and shares ISAs despite also saying they prefer lower risk investments.

CP22/2 can’t sort all that, but it does show that the FCA is baring the teeth that it has – as ever, it can’t get new teeth unless the Treasury stumps up for a trip to the dentist for a shiny grill.

Assuming the CP goes ahead, and with a response period of only a few weeks it looks like the FCA isn’t mucking around, we’ll see a new category of investment introduced. This will be known as Restricted Mass Market Investments (RMMI) and you can read about it in paragraphs 3.3-3.9 in the CP. RMMIs will include ‘non-readily realisable securities’ such as unquoted shares, P2P and, importantly, qualifying cryptoassets. ‘Qualifying’ is a big word there but we don’t have time to unpack it; suffice it to say that this will catch a lot of the stuff that you don’t like to see on the Tube.

RMMIs can still be sold to the public, but will come with a wealth of regulatory overhead and pain that we are all very used to, but which the promoters of crypto platforms and the like are not. That will include greater friction in sign-up periods, cooling-off, more controls over self-certification as sophisticated investor and more. For example, if you take one of the wee ‘are you a sophisticated investor’ tests you won’t be able to just retake it or be coached through it in the same way you can now.

The FCA can’t make crypto and other unregulated assets regulated. But they can control promotion a lot more, and one way to do that is to clamp down on what are known as ‘section 21’ arrangements, where a regulated individual or business signs off financial promotions for unregulated companies. This is a simply tremendous wheeze at the moment, and the CP has quite a lot to say about making the bar a lot higher in this regard. That’s a very good thing. M’colleague Mr Tom McPhail points out that these arrangements also had a had in the British Steel debacle, so it’s not surprising that it’s raised its head. Planners reading this who have clients’ best interests at heart should be happy.

The other thing you should take notice of is the prevalence of Consumer Duty references in the early part of the CP – this is clearly top of mind for the regulator at the moment. Consumer Duty gives the FCA the ability to go after bad actors in a new rules-based way, and with some velocity. This is not going to go away and is going to affect you – as the CP says in section 2.36, “We would generally expect firms with a direct relationship with the retail customers to have greatest responsibility under the Consumer Duty.” While much of the direct offer regulation in the CP doesn’t impact advised clients, this certainly does. Don’t ignore it.


  • Congrats to both Dave Ferguson, ex-Nucleus CEO, and Octopus-owned Seccl, as they come together. We shall watch with interest as Seccl enters a new phase.
  • Speaking of Dave, you can see him, Guy Opperman the Pensions Minister and lots more at #langcatlive on 10 Feb. Tickets available here thank you please.
  • HomeGames is back! We’re doing them monthly this year, and our first HomeGames 2.0 is on technology and integration. It’s next Wednesday at 12.30pm and you can register here. Wealth Wizards, Nick Eatock from Intelliflo, Emma Napier from Bravura and Lena Patel of ISJ Financial Planning star, with our own Natalie Holt keeping order. Don’t miss it.
  • It’s that time of the quarter when we need your platform reviews please. Doesn’t take long, and we now have a – though I say it myself – quite spanky prize draw offering which has stuff you might actually want in it. Everything you need is here.
  • And your music choice? You – like me – will be excited about the prospect of a new Amorphis album next month, of course. So here’s a wee taster with newish single ‘The Moon’. It’s about the moon, and a bloke with a horse.

See you next week