FCA rules on high-risk investments

The Financial Conduct Authority (FCA) classifies certain investments as high risk and imposes specific rules on how they can be sold and promoted to ordinary investors. For investments in non-readily realisable securities arranged through an online platform, the FCA's own required risk summary states plainly: "Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk."¹ For speculative illiquid securities, the classification is stronger still: the FCA considers them "very complex and high risk".¹

These rules exist because the products caught by them can lose some or all of your money, and because the protections people assume they have often do not apply. The FCA's standard risk summary includes a rule of thumb that no more than 10% of your money should go into high-risk investments¹, and it warns that the business offering some of these investments is not regulated by the FCA, so the Financial Services Compensation Scheme (FSCS) will not cover you if it fails¹. The rules around these products have been tightened repeatedly since the FCA first extended its non-readily realisable securities rules beyond the perimeter of regulation back in 2014².

What the FCA counts as a high-risk investment

The FCA's rules centre on a category called non-readily realisable securities: investments that cannot easily be sold, or whose price is not readily available, so you may not be able to get your money out when you want to. The FCA put in place its non-readily realisable securities rules back in 2014, and they extended outside the perimeter of regulation, meaning they reach promotions for products that are themselves not regulated investments². That is an important point for consumers: the rules can apply to how something is advertised to you even where the underlying product sits outside the main regulatory regime.

The required risk summaries attached to these investments tell you what the FCA thinks of them. For investments in non-readily realisable securities arranged by a firm by way of an online platform, the classification is "high risk"¹. For speculative illiquid securities, it is "very complex and high risk"¹. These are not marketing labels: they are the words the FCA requires to be shown to investors, and the FCA Handbook sets out which formulation a firm must use depending on whether the person offering the investment is an authorised person¹.

The risk summary also carries practical warnings that matter before you commit money. You may have to pay exit fees or additional charges to take any money out of your investment early¹. And a good rule of thumb, in the FCA's own required wording, is not to invest more than 10% of your money in high-risk investments¹. The broader context for these rules is covered in investment risk and your attitude to risk, and the question of what happens when you cannot sell at all is covered in fund suspensions.

Loan notes, mini-bonds and crowdfunding: the risks the FCA warns about

Loan notes, mini-bonds and crowdfunding arrangements have each drawn specific regulatory action over the past decade, and the pattern is consistent: products that promise fixed returns from lending money to businesses, often promoted aggressively, with little protection if the borrower fails.

For speculative mini-bonds, the FCA introduced temporary product intervention measures from 1 January 2020 to 31 December 2020 to address the risks to retail investors⁵. Those measures restricted how such products could be promoted, reflecting concern that ordinary investors were being sold illiquid, high-risk debt without understanding what they were buying. The risks of these products in practice are covered in more detail in mini-bonds and how risky they are.

Crowdfunding and peer-to-peer lending prompted their own regime. The regulatory requirements the FCA introduced for P2P lending platforms included minimum prudential requirements, rules on holding client money, and rules on the resolution of disputes⁶. The innovative finance ISA, which wraps some of these investments in an ISA wrapper, has its own valuation rule: payments under the relevant agreement must be such as might reasonably be expected to be made under such an agreement entered into in the open market⁷, a safeguard against platforms valuing loans optimistically. How these platforms work, and what has happened to some of them, is covered in peer-to-peer lending and investment crowdfunding.

Crypto-based fundraising has been on the FCA's radar for even longer. On 12 September 2017 the FCA published a consumer warning about the risks of Initial Coin Offerings (ICOs)⁸. In 2019 the FCA restricted the availability of contracts for difference (CFDs), limiting how much could be borrowed and requiring firms to warn potential customers of the percentage of their retail clients that lose money using them⁹. In 2025 the FCA warned investors in CFDs that they were at risk of losing UK protections¹⁰. How CFD losses can exceed what you put in is explained in CFDs and how you can lose more than you put in.

Financial promotions must be fair, clear and not misleading

The foundation of the promotion rules is a simple standard: financial promotions must be fair, clear and not misleading¹¹. The same standard runs through the regime wherever it appears. In consumer credit, a lender must communicate information to consumers in a way which is clear, fair and not misleading¹¹. For buy-now-pay-later lending, promotion rules have been amended to ensure BNPL advertisements are fair, clear, and not misleading¹².

The legal basis is the Financial Promotions Regime, set out in the Financial Services and Markets Act 2000⁵. Under that regime, promotions communicated by unauthorised persons generally need to be approved by an authorised person. As a consequence of recent changes, financial promotions communicated by an unauthorised merchant who offers a third-party lender's regulated deferred payment credit agreements will need to be approved by a FSMA authorised person¹³. Separately, the promotion of unfair commercial practices in, or in connection with, a code of conduct is prohibited¹⁴.

A weakness the regime has had to confront is the exemptions for high net worth and sophisticated investors. These exemptions allowed unauthorised firms to issue financial promotions to high net worth and sophisticated investors without having to comply with the FCA rules, including the clear, fair and not misleading requirements⁵. A government consultation on the regulatory framework for approval of financial promotions considered two options: restricting approval of the financial promotions of unauthorised firms through the imposition of requirements by the FCA, or specifying the approval of financial promotions communicated by unauthorised persons as a regulated activity under FSMA⁵.

For a consumer, the practical point is this: an advert that looks polished is not evidence of authorisation. The rules bite on firms, but the check that a firm is actually inside the regime is one you make yourself, on the FCA register, before you invest.

Unregulated schemes and cryptoassets fall outside the safety net

The protections people associate with investing do not follow the product; they follow the firm and the activity. Where the business offering an investment is not regulated by the FCA, the required risk summary states it plainly: "The business offering this investment is not regulated by the FCA. Protection from the Financial Services Compensation Scheme (FSCS) only considers claims against failed regulated firms."¹

Cryptoassets are the clearest current example. The FSCS does not protect qualifying cryptoassets because they are not a 'specified investment' under the UK regulatory regime¹. Most cryptoassets, for example, are not FSCS protected because they are not regulated, including virtual currencies like Bitcoin and Litecoin¹⁵. What this means in practice, and where any protection does exist, is covered in are cryptoassets protected by the FSCS? and the wider cryptoassets: the rules and your protection guide.

Savings products can fall outside the net too. Consumers are warned to be cautious of unregulated savings schemes that do not provide the same protections as regulated savings accounts¹⁶. These schemes, sometimes offered by companies or clubs outside the banking perimeter, can look like ordinary savings accounts while offering none of the FSCS protection that regulated accounts carry. The general boundary is explained in does FSCS cover unregulated investments?.

Consumer Duty: what firms selling investments must do for you

Since 2023, the FCA's Consumer Duty has set the overall standard of behaviour expected of firms. Its consumer principle is short: "A firm must act to deliver good outcomes for retail customers."¹⁷

Beneath that principle sit cross-cutting rules that require firms to act in good faith toward retail customers, avoid causing foreseeable harm to retail customers, and enable and support retail customers to pursue their financial objectives¹⁸. The Duty applies across all of a firm's regulated activities, from high-level strategic planning to individual customer interactions¹⁹. So a firm selling you a high-risk investment is expected to consider your needs, characteristics and objectives at every stage of the customer journey, including where you have characteristics of vulnerability²⁰.

The Duty has teeth in specific rules too. Where a firm claims to be able to remove negative but accurate entries but instead offers its service as a lender or credit broker, that is likely to be a contravention of the Principles, in particular the Consumer Duty cross-cutting obligations to act in good faith and to avoid causing foreseeable harm²¹. In the investment sphere, a platform service provider should pay due regard to its obligations under the Consumer Duty and the client's best interests rule, and ensure that it presents retail investment products without bias²¹. The same guidance says a platform should not vary its platform charges inappropriately according to provider or, for substitutable and competing retail investment products, the type of retail investment product²¹.

For a consumer, the Duty means the firm's obligations do not end at the point of sale. Firms are expected to support you while you are using their product or service, and to be flexible and find ways to support vulnerable customers²⁰. If a firm's behaviour fell short of the Duty, that is something the Financial Ombudsman Service can take into account when it looks at a complaint.

Costs and charges you must be shown before you invest

The FCA's disclosure rules for packaged investments require a product summary that must explain the importance of costs and charges, with a clear explanation of the impact of the costs and charges an investor pays on potential growth, and that the person selling or advising may charge other costs and charges²². The product summary must also be clear as to which costs and charges are estimated²³.

The rules, in the FCA Handbook's DISC 6, were last updated on 6 April 2026²³. The manufacturer must include in the product summary the transaction cost figure, expressed as a percentage of the applicable assumed investment amount²³. That matters because transaction costs inside a fund are otherwise invisible to you: they are deducted from the fund's assets rather than charged to your account, so a percentage figure in the product summary is often the only place you will see them.

Costs interact with the risk warnings. The required risk summary for non-mainstream pooled investments warns that you may have to pay exit fees or additional charges to take any money out of your investment early¹. So the full cost picture has three parts: the entry costs shown in the product summary, the ongoing charges expressed as percentages, and the exit charges that can apply if you need your money back sooner than the product allows. How fund charges work generally is covered in fund charges and the ongoing charges figure, and platform costs in investment platform fees and charges.

Financial advice, targeted support and what it costs

Help with investing comes in different forms, and the level of protection depends on which you use. Regulated financial advice is personal to you and comes from a firm the FCA authorises; if something goes wrong, the Financial Ombudsman Service may be able to help with a complaint about a financial adviser that is regulated by the FCA²⁴. What advice tends to cost is covered in how much does a financial adviser cost?, and the difference between adviser types in independent vs restricted financial advisers.

Between doing everything yourself and taking full personal advice sits targeted support, a newer form of financial guidance. FCA guidance in COBS 6.1E, updated on 26 June 2026, references targeted support services²¹. Targeted support is designed to give you help that takes some account of your circumstances without the full cost of personal advice. How it works is covered in targeted support for investors and savers.

The distinction matters for protection as much as for cost. A complaint about a financial adviser or pensions provider that is regulated by the FCA can be taken to the Financial Ombudsman Service²⁴. Support that falls outside the regulated perimeter, such as information from an unregulated source, does not carry that route to redress. The three service levels are compared in execution-only, advisory and discretionary services compared.

Advice from AI tools may not be protected

In August 2026 the FCA published research showing widespread use of AI tools by inexperienced investors, and warned that AI-generated financial information falls outside its regulation and protection schemes. The warning matters because the protections described on this page attach to authorised firms and regulated activities. A chatbot, however confident its tone, is neither.

The same boundary already applies to products. The FSCS does not protect qualifying cryptoassets because they are not a 'specified investment' under the UK regulatory regime¹, and most cryptoassets are not FSCS protected because they are not regulated, including Bitcoin and Litecoin¹⁵. Unregulated savings schemes likewise do not provide the same protections as regulated savings accounts¹⁶.

The practical rule for a consumer is to separate information from advice. An AI tool can explain what a bond is or summarise a product's features, but it is not authorised to give you a personal recommendation, and if you act on what it says and lose money, there is no firm to complain about and no compensation scheme behind it. Anything that looks like a personal recommendation should be checked against the FCA register like any other source, and the warning signs of investment fraud are covered in investment scams.

Check a firm on the FCA register before you invest

The single most useful check before investing is free and takes minutes. The FCA register will tell you what the firm is allowed to do, and whether it is still trading²⁶. Dealing in investments is a regulated activity in the UK, so trading platforms require authorisation from, and are regulated by, the FCA⁹.

The FSCS sets out the same steps for checking investment protection. First, check your provider is authorised by the Financial Conduct Authority (FCA). Second, find out if the particular activity that the authorised firm is carrying out for you is regulated by the Prudential Regulation Authority (PRA) or the FCA²⁷. The second step matters because a firm can be authorised for some activities and not others: an authorised firm offering you an unregulated product is a real scenario, and the register shows the permissions that cover, or do not cover, what it is doing for you.

The advice from public bodies is blunt. If you are unsure about a financial services company, check the FCA register of regulated companies; if they are not on it, do not have anything to do with them²⁸. You can also check the register by contacting the FCA on 0800 111 6768⁴. The FCA publishes contact details for regulated financial businesses³, so a firm that cannot be found there, or that gives contact details that do not match, is a warning sign in itself.

Recognising an investment scam

The FCA's required risk warnings do part of this work: an investment described as high risk, with a 10% rule of thumb on how much of your money to expose¹, is telling you what the regulator thinks of it. But scams sit outside even those rules, because the people running them are not authorised in the first place.

Some warning signs carry legal consequences for the victim. Falling for a money mule scam, where you are asked to receive and move money through your own account, could mean you are breaking the law by money laundering²⁹. An "investment opportunity" that asks you to move funds for others is not an investment at all.

For checking and reporting, the FCA is the go-to contact if you want to check if a firm is legitimate or report a possible scam³⁰. The practical steps are the same as in the previous section: search the register, check the firm's permissions, and if it is not listed, have nothing to do with it²⁸. Free, impartial help is available from MoneyHelper, which sets out the types of scam to watch for²⁹. The warning signs in detail, and what to do if you have already paid, are covered in investment scams: warning signs and what to do and the wider scams and fraud guide.

Where the FCA cannot help: complaints, compensation and the Financial Ombudsman

The FCA regulates firms; it does not resolve individual disputes or pay compensation. The Financial Ombudsman Service can help you resolve a problem with your investment, as long as the business you are complaining about is regulated by the FCA³¹. The ombudsman follows rules set by the FCA³², and can decide on an appropriate remedy, including a money award up to a limit set by the FCA, or a direction to put things right³³.

The limits matter. Some arrangements involve several parties, not all of them regulated: multiple occupancy buildings insurance policies may involve insurers, brokers, property managers and others whose firms may not be regulated by the FCA, meaning the ombudsman cannot investigate the part they played³⁴. For complaints against independent financial advisers, the ombudsman may not be able to help if it is about something that happened before 14 January 2005 and the policy does not include an investment element³⁵. Complaints about firms not on the FCA Register should be referred to the Pensions Ombudsman³⁶. Complaints that fall outside the ombudsman's voluntary jurisdiction continue to be dealt with under the FCA's DISP rules³⁷.

Timing works like this. For most complaints, a business has up to 8 weeks to consider a complaint³. If it does not respond in time or you reject its answer, the complaint can go to the ombudsman. The FCA itself cannot pay compensation, even if you have received poor service³⁸, though in limited circumstances it can apply to a court for restitution where an unfair term also amounts to a rule breach causing loss to consumers³⁹. What FSCS protection does and does not cover for investments is explained in what happens if an investment platform or pension provider fails, and the wider framework in consumer protection in UK financial services.