We are consulting on making our temporary rules on marketing certain high-risk investments permanent and extending them to some similar securities.
We want to prevent harm to consumers from investing in complex, higher-risk products that they do not understand and are not suitable for them. Investing in these securities can cause unexpected and significant losses for retail investors. Our temporary product intervention (TPI) for speculative illiquid securities (SISs) came into effect on 1 January 2020 and lasts for 12 months.
It restricts speculative mini-bonds and preference shares from being mass-marketed to retail investors. It also improves disclosure of key risks and costs to the limited number of retail investors who are still eligible to receive promotions for them. We now propose making the TPI permanent, with a small number of changes.
The harm caused by speculative mini-bonds is starting to migrate to some listed bonds, which are currently excluded from the TPI. We propose bringing these listed bonds under the TPI rules.
This consultation is relevant to:
This consultation will also be of interest to:
When we published our TPI in November 2019, we set out the case for introducing marketing restrictions for SISs, including speculative mini-bonds. We were concerned that they were openly marketed online, despite being high risk and difficult for most retail investors to understand.
We now have the same concerns about listed bonds with similar features to SISs that are not regularly traded, which are not currently subject to the TPI.
We need to consult to make the TPI rules permanent and to extend them to relevant listed bonds. We also propose to make a small number of changes to the TPI rules, which are generally based on feedback we have received since publishing the TPI.
We will consider the feedback received and engage directly with stakeholders on these matters. Subject to the feedback, we aim to publish a Policy Statement before the end of 2020 and intend that the rules making the TPI permanent will begin on 1 January 2021.