UK tightens rules on advertising high-risk investment products

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The UK's Financial Conduct Authority (FCA) has approved stricter rules to combat misleading advertising, but has spared cryptocurrencies.

The rules apply to all investmentproducts with a high degree of risk, but so far they do not apply to the promotion of crypto-assets. The regulator expects the UK government to legislatively expand the powers of the FCA and allow it to regulate cryptocurrency marketing. Once this is done, the FCA will extend the rules to cover crypto advertising:

“The rules for digital assets will befollow the same vector as the rules regarding high-risk assets. Cryptocurrencies still remain high-risk investment products, so people should be prepared to lose their money if they decide to invest in crypto assets.”

New, stricter rules for risk takersinvestment products require that companies that produce marketing materials have relevant experience. In some cases, they will have to ensure that advertising is not misleading to consumers and that potential clients understand the full extent of their responsibilities.

However, some investment incentivessuch as refer-a-friend bonuses will be banned and advertisers will have to use clearer, more visible risk warnings, FCA chief markets executive Sarah Pritchard says:

“We try to do everything to helpWhile consumers can better understand the risks, asset providers themselves have an important role to play. We are prepared to act if we see advertising that explains the essence of the product in vague terms.”

Earlier, FCA Chairman Nikhil Rathi said that most crypto companies support regulating the industry because it provides a sense of certainty.