Risk Warnings Review Report, nice idea
Since December last year whenever I’ve seen a headline about the Chancellor wanting a risk warnings review, I get all excited, and I start reading and then I remember the scope. I fell for it again last week, the Investment Association published the Report - Supporting a New Retail Investment Culture. https://www.theia.org/sites/default/files/2026-04/Risk%20Warnings%20Review%20Final%20Report.pdf
The premise is obviously good, a generic "capital at risk" boilerplate warning doesn’t seem like a great idea. Consumers are being put off mainstream investing by language designed to protect them, and something needs to change. The consumer research backs that up.
Yeah but not high-risk investments
Of course, I know mainstream investments represent an enormous market and where the biggest aggregate consumer harm from poor risk communication sits. My universe, the high-risk investment sector is tiny by comparison. If you're the Investment Association coordinating a piece of work for HM Treasury, you go where the numbers are of course.
But a report that sets out to fix how investment risk is communicated to consumers, and then explicitly carves out the investments that are high risk, I just find a bit weird.
The Review is scoped to mainstream investment products and excludes any FCA rules that require specific prescribed risk warnings. That's a nice tidy way of avoiding a hard conversation.
The framework that applies to higher-risk investments is PS22/10, which came into force in February 2023. It introduced prescriptive financial promotion rules for Restricted Mass Market Investments under COBS 4.12A and Non-Mass Market Investments under COBS 4.12B. Under PS22/10, firms don't have room to experiment with wording. The rules mandate specific warning language, a multi-stage gated investor journey, appropriateness testing, and a 24-hour cooling-off period before the investor can proceed.
The FCA's intention in PS22/10 was clear: these products carry real risk and consumers should understand that before they commit and the same goes for Crypto assets PS23/6. Who can argue with that.
Risk and reward, fees and trust
Framing of risk and reward as a pair is clearly right. However, reward has got to mean what the consumer actually receives surely?
Aren’t fees part of the trust problem the review is trying to solve. A balanced statement about long-term growth potential reads very differently if charges are running at 1.5% a year. Opaque fee structures are their own barrier to consumer confidence.
(BTW - crowdfunding platforms and P2P lenders don't typically charge investors at all. Fees in those markets are paid by the businesses raising the capital.)
Wealth management, fund sectors, pensions, charge annual management fees, platform fees, and various other charges that combine in ways that are genuinely difficult for consumers to unpick. The trust deficit the review identifies isn't evenly distributed across the market, and neither is the fee opacity problem. Interesting that the Report was developed by some practitioners whose own record on transparent cost communication is mixed (which is generous).
One of the report's central arguments is that risk and reward should be presented in a balanced way. But a beautifully worded risk statement sitting above an opaque fee structure is not balanced communication.
I get it one thing at a time, I just feel at least acknowledging that fees and risk warnings are part of the same trust problem, and that fixing the risk language while leaving the cost structure untouched only addresses the surface. (Not one mention of fees, costs or charges in the whole report.)
My wish
The question the Review could have asked, but didn't, is whether the same evidence-led approach it has applied to mainstream products should now be applied with high risk investments. Are consumers who have been through this sequence genuinely better informed about what they're getting into by the time they invest?
That conversation should also start from a more honest segmentation of what "high-risk investment" actually means. A platform connecting retail investors with a local renewable energy project is not the same as one selling crypto tokens. Treating them as equivalent in regulatory design, and then excluding them both from a review of how risk communication could be improved, leaves a whole category of genuinely useful investment activity carrying a regulatory burden calibrated for a very different kind of risk. We wrote recently about illiquidity not being the same as speculation.
The high-risk investment sector connects retail investors with capital that mainstream financial services won't provide: green infrastructure, community energy, property development, SME lending. Consumers who engage with these products deserve communication that genuinely helps them understand what they're getting into. That
means being understood, not just being displayed. And it means being honest about the full picture, risk, reward, and cost, not just the part that's easiest to rewrite.