The City of London Law Society has responded to FCA’s discussion paper on changes to the financial promotion rules for high risk investments and for firms approving financial promotions. It:
- is concerned the regime for high risk investments has now become a complex patchwork which is hard for firms to understand;
- says there is an increasing, and arguably anomalous, disconnect between COBS4 and the FPO;
- says that really what is needed is a wider review less focussed on prescriptive rules which it says can result in a “whack a mole” approach – and this review should protect the breadth of necessary exemptions and not restrict retail customers unduly by using the vulnerable customer as the basis;
- worries that increasing the regulatory burden on approvers and restricting definitions will lead to less choice for investors;
- says work to mitigate scam investments should be prioritised to address the perimeter risk – which making the regime more onerous for authorised firms will not do;
- calls for Online Safety legislation to make social media companies act;
- notes that any proposals to change client categorisations should be accompanied by a comprehensive cost-benefit analysis