The FCA has called for firms to assess their processes for selling complex exchange traded products (ETPs) to retail customers.
Following a review, the UK regulator found some firms demonstrated detailed processes for defining target markets, assessing customer knowledge, and monitoring outcomes.
However, others had weak controls or limited assessments of their customers’ investment experience and knowledge, and a selection of providers did not clearly disclose the associated risks to consumers.
The FCA said given the complexity and risk profile of ETPs – which include crypto exchange traded notes (cETNs) – it is essential firms make sure investors have the knowledge they need to make informed investment decisions.
“Firms should review their processes and make sure they are meeting the Consumer Duty requirements,” the FCA said in an update.
“This includes addressing gaps in appropriateness checks and clearly communicating risks to retail investors.
“The review supports our broader work to protect consumers and enable a fair and thriving investment culture in the UK.”
