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Amending the ban on incentives for high risk investments

The FCA have recently announced that they are consulting on minor amendments to the ban on offering retail clients incentives to invest in high-risk investments.

This is as part of CP 23/14: Quarterly Consultation Paper No. 40. The relevant proposed amendments to the ban can be found in Chapter 4 and Appendix 4.

The rule banning incentives for high-risk investments came into force on 1 February 2023. The regulator believes that offering incentives can unduly influence consumers’ investment decisions and cause them to invest without fully considering the risks involved. T

The aim of the ban is therefore to protect retail investors and reduce the risk of harm caused by unsuitable investment decisions.

Following industry feedback however the regulator recognises the need to provide further clarification on the scope of the ban in order to prevent any misunderstanding of the policy and to clarify some of the factors that it considers characterise an incentive. This can be either a monetary or non-monetary benefit.

Feedback is welcome on the proposed amendments until 10th July 2023.


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