FCA highlights good practices and risks in complex ETP sales
The Financial Conduct Authority (FCA) has reviewed how firms sell complex exchange traded products (ETPs) to retail consumers. The review highlights both good practices and areas for improvement under the Consumer Duty.
Varying rigor in investor assessments
The FCA found that some firms demonstrated detailed processes for defining target markets, assessing customer knowledge, and monitoring outcomes.
However, others exhibited weaker controls, limited assessments of customer experience, and unclear disclosures, making it difficult for consumers to understand inherent risks.
The regulator stresses the importance of firms ensuring investors possess the necessary knowledge for informed decisions.
Closing gaps in Consumer Duty compliance
Firms are urged to review their processes to meet Consumer Duty requirements, specifically addressing gaps in appropriateness checks and enhancing risk communication to retail investors.
This initiative supports the FCA's broader objective of protecting consumers and fostering a fair and thriving investment culture within the UK market.