02 January 2020

In a nutshell, financial promotions relating to 'speculative illiquid securities' will be restricted to sophisticated or high-net worth retail investors (and such promotions will have to clearly state the risks to consumers of losing all their investment and fully disclose all costs or third-party fees).

'Speculative illiquid securities' are unlisted bonds and preference shares, where the issuer uses the funds raised to lend to a third party, invest in other companies, or purchase or develop property.

The temporary rules will apply from 1 January to 31 December 2020 but the FCA plans to consult on permanent rules in H1 2020. The consultation is expected to include proposals for making the temporary rules, or similar measures, permanent, but also other changes to enhance consumer protection related to high-risk investments more broadly.

This blog was written by Anna Davis.

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