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What has happened? 

In November 2023, the FCA published new non-Handbook guidance (FG 23/3) to support crypto firms in complying with its new marketing rules. The guidance also details how authorised firms communicating or approving financial promotions should apply the Consumer Duty to their marketing.

What are the key points?

The Guidance does not create new obligations for firms; it relates to firms’ existing crypto regulation obligations.

Key points of this guidance are;

When assessing whether a financial promotion is fair, clear and not misleading firms should consider the promotion’s substance and presentation. A firm may need to consider the following factors when assessing this:

1. Clarity and comprehension of the promotion. Firms should ensure that all promotional materials are presented in a way that is easy to understand by consumers, considering the information needs of the likely recipients of the promotion.
2. Consumers’ understanding of risks. Firms should ensure that the promotion enables consumers to take an informed view on the risks of investing in cryptoassets. Promotions should not trivialise the risks involved or take advantage of consumers’ lack of experience or knowledge.
3. Providing a balanced view of information. Firms should provide a balanced view of the potential risks and rewards associated with cryptoassets.
4. Exaggerated claims. Firms should avoid making exaggerated claims about the potential benefits of cryptoassets.
5. Omitting relevant information. Firms should not omit information that would affect consumers’ ability to make an informed decision about the overall investment proposition.
6. Accuracy of information. Firms should ensure that all supporting information in the financial promotion, such as facts, figures, and statements, are accurate, up to date, and substantiated.
7. Past and future performance. COBS 4.6 sets out rules which firms must comply with when communicating or approving financial promotions which include information about past performance. Firms should also have regard to the rules in that section on communicating information about future performance.
8. Disclosing costs, fees and charges. Financial promotions should clearly outline any costs, fees and charges for the products or services promoted. This could include transaction fees, exchange fees, platform fees, and any other charges. Firms should present this information in a straightforward and transparent way so potential consumers can make informed investment decisions.
9. Effective systems and controls. Firms should have effective systems and controls to monitor the compliance of their promotions or promotions they approve with relevant rules and be able to amend or withdraw promotions in light of market developments or other events that could affect the fairness of claims made (in relation to the responsibilities of approvers.

The FCA has undertaken to continue to engage with firms and keep the guidance under review.

How can we help you with crypto regulation? 

Thistle Initiatives has supported cryptoasset firms for over 10 years as a trusted compliance and regulatory advisor. In addition to assisting you as-and-when, our team of specialists can serve as your right hand in meeting and complying with FCA crypto regulation. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.

Are you looking for help with your crypto financial promotion arrangements, or more general regulatory questions? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 020 7436 0630 or sending an email to info@thistleinitiatives.co.uk.