FCA Financial Promotions: Risk Warnings (COBS 4.5)
Risk Warnings [COBS 4.5]
Citation: COBS 4.5
Key rule (COBS 4.5): Yes, risk warnings are required. Financial promotions must include appropriate warnings that capital is at risk. For investments: “The value of investments can go down as well as up, and you may not get back the amount invested.”
Rule: Must include appropriate risk warnings prominently.
Required warnings vary by product:
- Investments: Must warn that your capital is at risk - typical wording: “The value of investments can go down as well as up”
- Complex products: Specific warnings about complexity
- High-risk investments: Enhanced warnings, positive frictions (capital at risk prominently displayed)
- Crypto: “Don’t invest unless prepared to lose all money” (see COBS 4.12A/4.12B)
Prominence: Risk warnings must be as prominent as potential benefits
Source Text
COBS 4.5.2R A firm must ensure that a communication or a financial promotion… includes appropriate risk warnings.
COBS 4.5.8R A firm must ensure that a financial promotion relating to a high-risk investment: (1) includes the required risk warning statement appropriate to the type of product; and (2) presents the required risk warning statement in a way that is prominent, comprehensible and gives it appropriate emphasis.
Standard risk warning for investments: “The value of investments and the income from them can go down as well as up, and you may not get back the amount you invested.”