Trea­sury plan would close FCA loop­hole

The Daily Telegraph - Business - - Business - By Harry Bren­nan

FI­NANCE firms will be un­able to pro­mote high-risk un­reg­u­lated in­vest­ments with­out spe­cific per­mis­sion from the City watch­dog un­der new pro­pos­als to pro­tect the pub­lic.

Com­pa­nies reg­u­lated by the Fi­nan­cial Con­duct Au­thor­ity will in future need ap­proval for ev­ery prod­uct they mar­ket which is of­fered by an unau­tho­rised com­pany if the plans go ahead.

It fol­lows a string of scan­dals in which in­vestors were per­suaded to pump their money into dan­ger­ous projects by fi­nance com­pa­nies. This in­cludes the col­lapse last year of Lon­don Cap­i­tal and Fi­nance, which went bust owing £237m to 11,500 people.

The Trea­sury plan in­tends to sew up a loop­hole which al­lows com­pa­nies that are them­selves over­seen by the FCA to mar­ket in­vest­ments that ex­ist out­side the so-called reg­u­la­tory perime­ter – mean­ing they are not vet­ted by the watch­dog. Some of these in­clude ul­tra-risky punts on for­eign hol­i­day de­vel­op­ments or en­ergy projects. Pro­pos­als also in­clude a crack­down on the dig­i­tal cur­rency mar­ket, bring­ing cer­tain types of crypto cur­rency un­der the FCA’s scru­tiny for the first time.

Bit­coin and ri­val on­line money pro­mo­tion would be reg­u­lated more tightly.

John Glen, the City Min­is­ter, said: “It’s im­por­tant that people can un­der­stand the fi­nan­cial prod­ucts they see pro­moted. If ad­verts by unau­tho­rised firms are mis­lead­ing, or don’t fully out­line the risks, then people can end up los­ing money.”

Around 2.6mil­lion people have now pur­chased some form of crypto as­set, ac­cord­ing to FCA re­search. More than a third who did so said they were en­cour­aged to via an ad­vert, with 83pc of buy­ers mak­ing pur­chases via ex­changes based out­side of Bri­tain.

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