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Advisers welcome FCA consultation into ‘novel securities’ promotion ban


Financial advisers have welcomed the Financial Conduct Authority’s planned consultation into a ban on promoting ‘novel securities’ like contingent convertibles to retail investors.

After confirming a ban on the retail marketing of unregulated collective investment schemes, the FCA says it is “monitoring the market” in non-pooled investments like CoCos, building societies deferred shares and other novel securities out of concern that they are inappropriate for retail investors.

Chase de Vere head of communications Patrick Connolly says: “It is difficult to argue against the decision with Ucis and the deicison this expand this ban. Any investor not getting adequate protection means FCA should look at it.”

Philippa Gee Wealth Management managing director Philippa Gee says: “All we have to do is protect investors that are duped into investments for the wrong reasons. As these investments become more complicated, the chances of this becomes higher.

“We need to see the outcome of their investigation first of all. We could have a mounting FCA levy. If it means shoutting down these investments then that might have to be done. These costs are spiralling and if a radical stance needs to be taken then that is what is needed.”

Regarding the FCA levy implications, Connolly is more sceptical: “There has been a lot of talk about that. Most of the issues relate back to products that were sold five to 10 years ago and nowadays advisers are much more stringent.”

Charles Stanley head of research Ben Yearsley: ”It kind of makes sense, I don’t see a problem in it. With CoCos it makes sense because they are more complicated. They are not going to be the easiest to understand, they should be more for professional investors.”

Hargreaves Lansdown head of research Mark Dampier says: “In some respects, who promotes them? I wouldn’t have thought they had been promoted that much – they are not really retail friendly products. This is something that is already pretty much there.”


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