FCA Financial Promotions: Risk Warnings (COBS 4.5)
Risk Warnings [COBS 4.5]
Key rule: Yes, risk warnings are required. For investments, include “capital at risk” or similar warning.
Rule: Must include appropriate risk warnings prominently.
Required warnings vary by product:
- Investments: “Capital at risk” or similar
- Complex products: Specific warnings about complexity
- High-risk investments: Enhanced warnings, positive frictions
- Crypto: “Don’t invest unless prepared to lose all money”
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.”