FCA warnings on selling compex products

FCA warnings on selling complex products

The FCA has warned that a number of firms are not meeting expected standards when selling complex investment products to retail investors. Its review found weaknesses in how firms assess investor understanding, define target markets, and communicate risk.

In particular, disclosures are often overly technical and fail to explain clearly how features such as leverage, volatility, or daily resets can impact outcomes. While some firms have improved governance and controls, the FCA remains concerned that poor sales practices could lead to consumer harm, especially where complex products are distributed at scale.

Firms are expected to tighten oversight and ensure their approach aligns with the Consumer Duty, placing demonstrable emphasis on good customer outcomes rather than process compliance alone.

For financial institutions, the FCA’s findings reinforce the importance of ongoing oversight of intermediaries, not just initial onboarding checks. Weak sales practices, unclear disclosures, or poor suitability assessments often surface first through public signals — customer complaints, FOS referrals, adverse press, or regulatory commentary.

Watchdog’s role is to help institutions keep a continuous, external view on intermediaries they rely on, identifying emerging conduct risks early by monitoring complaints, disputes, governance changes and regulatory indicators. This allows firms to intervene proportionately, evidence effective oversight, and reduce downstream regulatory and reputational risk — particularly in areas involving complex or higher-risk products.

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