The Financial Conduct Authority (FCA) has written to the bosses of equity crowdfunding platforms about the key risks it sees in the market, warning that consumers are still making “inappropriate” investments despite existing marketing restrictions.
The City watchdog said that advances in technology have made investing more accessible and “too many” consumers are still investing in inappropriate, high-risk investments that do not meet their needs.
“Our rules on client categorisation (as ‘restricted’, ‘high-net-worth’ or ‘sophisticated’ investor) play a key role in protecting consumers,” the FCA said.
“We are concerned that too many consumers simply ‘click through’ this process, without sufficient verification by firms, and do not understand the risks of how they have been categorised.”
The FCA also expressed concerns that consumers may be holding more than 10 per cent of their investment portfolio in…