The UK Financial Conduct Authority (FCA) has delivered another “Dear CEO” letter specializing in the subject of monetary promotions — that moment, the attention seemingly drops on promotions of products like mini-bonds. Even though the regulator does not cite London Capital & Finance in the correspondence, an individual might guess the content of this letter along with the very obvious strain set on promotions of mini-bonds have been influenced by LC&F’s collapse along with the people pressure to look into the situation.
Even if investment products aren’t regulated or are issued by firms that aren’t FCA-authorised, if a company supply a’s21 endorsement’ of their advertising, it may expect the FCA to take the company to attest that it has carried out such due diligence to ensure that the advertising is honest, clear and not misleading.
Advertising and the marketing of mini-bonds, such as those sold by LCF, are subject to marketing restrictions outlined in the Financial Services and Markets Act 2000. In the UK, responsibility for regulating the promotion and promotion of mini-bonds is based on the FCA, and companies that fail to meet all of the requirements might be subject to enforcement actions. Considering that the material is governed by the FCA, the item itself — mini-bonds — are not false.
This is the second”Dear CEO” letter dedicated to the subject of monetary promotions which the FCA has shipped this season. On January 9, 2019, the FCA published a letter addressed to the CEOs of firms it regulates to remind them about their responsibilities about the use of financial promotions. The FCA reminded firms that, before they approve a marketing for communication by an unauthorised individual, they must affirm that it complies with all the FCA rules on financial penalties. A good example would be an firm approving the financial promotions of mini-bonds, a type of investment product which could be issued by firms that the FCA does not regulate.
Direct offer financial marketing of mini-bonds along with other postal securities to retail clients is generally restricted to high net-worth investors, sophisticated investors or”limited investors” (who have certified they aren’t investing more than 10% of their net assets in non-readily realisable securities), the FCA clarifies. It’s the responsibility of the company that communicates or approves the offer financial promotion to make sure this limitation and the rules on appropriateness of their investment are coped with.
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In the end, the FCA warns that in scenarios where it finds non-compliance with its requirements by firms which approved promotions action will be taken by it. The regulator notes that it has a selection of measures it could take which could result in the amendment or elimination of financial penalties, the suspension or cancellation of planned issuance of these products to investors, formal limitations being placed on the actions of the companies which accepted non-compliant advertising and the FCA bringing civil or criminal proceeding.