Legal Considerations for Marketing and Promoting High Risk Investments in the UK

Thinking about marketing high risk investments in the UK? Maybe you’re planning to launch a fintech startup, promote crypto products, or offer investment opportunities in fast-paced sectors. There’s certainly a big market for innovative investment products, and the appeal is clear: higher returns, a tech-savvy customer base, and lots of growth potential.

But if your business deals in high risk investments, you need to know: this isn’t an area where you can afford to improvise. UK law has strict rules around marketing, promoting, and selling high risk investments-and the penalties for getting it wrong can be severe. Compliance isn’t optional, and the rules affect everything from your product disclosures and advertising, to customer onboarding and post-sale interactions.

In this guide, we’ll break down what counts as a “high risk investment,” which rules you need to follow, and how to keep your business legally protected from day one. Whether you’re just scoping a new venture or actively growing your audience, it’s crucial to understand your legal obligations-so keep reading to make sure you can promote your high risk investments with confidence (and avoid costly mistakes along the way).

What Are High Risk Investments in the UK?

Before we dive into the legal nitty-gritty, let’s clarify what we mean by “high risk investments” in a UK context. The term usually covers:

• Unregulated or speculative investment products (like mini-bonds, peer-to-peer lending, or unlisted shares)
• Cryptoassets and related financial promotions
• Complex financial derivatives, contracts for difference (CFDs), and margin-based products
• Investments marketed with potential for rapid returns but greater risk of loss
• Alternative investments, such as property crowdfunding or art investment schemes

In plain English: if it promises big potential returns but carries a significant risk of loss, you’re probably in “high risk” territory. The Financial Conduct Authority (FCA) and other regulators specifically monitor and restrict how these investments can be marketed, who they can be promoted to, and how risks must be disclosed.

Why Are There Special Legal Rules for High Risk Investments?

It comes down to consumer protection. High risk investments are more likely to result in losses for investors-especially those who don’t fully understand the risks. UK law aims to protect retail investors from aggressive or misleading sales practices, and ensure they receive clear, honest, and comprehensive information before making decisions.

Recent years have seen high-profile failures and scandals in the sector, so the FCA has cracked down with tough new rules. As a business, these rules are about more than just legal box-ticking-they’re about building trust, protecting your reputation, and ensuring long-term viability.

What Laws Regulate the Marketing of High Risk Investments?

When you promote high risk investments in the UK, you need to comply with several key laws and regulatory frameworks:

• The Financial Services and Markets Act 2000 (FSMA): Regulates “financial promotions” and prohibits unauthorised businesses from inviting or inducing others to engage in investment activity-unless the promotion is authorised or exempt.
• FCA Handbook: Contains specific rules about how financial products (including high risk and cryptoassets) can be marketed, disclosures required, and who can receive certain promotions.
• Consumer Protection from Unfair Trading Regulations 2008: Outlaws misleading advertising and unfair commercial practices.
• Electronic Commerce Regulations (UK ECRs): Apply to online advertising and require transparency on who is promoting the investment.
• ASA Codes (CAP/BCAP): Advertising rules that prohibit misleading or irresponsible marketing, including for financial services and investments.

Depending on your model, you may also need to comply with anti-money laundering (AML) laws, data protection requirements under GDPR, and more.

Who Can You Market High Risk Investments To?

The FCA puts strict limitations on who can receive promotions for high risk investments. Generally, you can only market them to “sophisticated investors,” “high net worth individuals,” or those who have completed specific appropriateness checks and have been properly “categorised.”

For retail investors, there are usually hefty restrictions or outright bans on promoting particularly high-risk products-like speculative mini-bonds and speculative illiquid securities (SIS). In many cases, these promotions can only be made to “restricted,” “high net worth,” or “sophisticated” investor types who confirm in writing that they meet the FCA’s criteria.

If you want to reach regular consumers, you’ll need to prove that:

• Your product isn’t on the restricted list; or
• You have robust checks in place to ensure the recipient is eligible and understands the risks.

Failing to follow these restrictions can result in penalties, being banned from making promotions, or (in the worst case) facing criminal sanctions.

What Are the Key Compliance Steps for Marketing High Risk Investments?

Here’s where the rubber hits the road. If you want to legally market or promote high risk investments to UK customers, you’ll need to work through the following checklist:

1. Check If Your Product Requires FCA Authorisation

Most high risk investments fall under the FCA’s remit. If you’re not FCA-authorised, you typically can’t approve or communicate financial promotions-or you’ll need to partner with an authorised firm to review and “sign off” your marketing. Don’t skip this essential step: operating without FCA authorisation, where required, is a criminal offence.

Learn more about regulated financial activities and the need for authorisation.

2. Only Market to Eligible Recipients

Make sure your systems and marketing materials include clear eligibility filters. This means:

• Certification forms confirming the recipient is a high net worth, sophisticated, or restricted investor
• Appropriateness tests to check that the recipient genuinely understands the product’s risks
• Evidence that you’ve made efforts not to target ineligible retail customers (for example, via online forms or “gates” before accessing promotional material)

3. Include Fair, Clear, and Not Misleading Disclosures

The FCA’s mantra is “fair, clear and not misleading.” Your promotions must:

• Set out the key risks of investment up front-in plain language
• Be balanced (don’t focus only on potential rewards-risks must be given equal prominence)
• Disclose fees, charges, and any lock-in periods or restrictions
• Comply with the Consumer Protection from Unfair Trading Regulations-that means absolutely no misleading statements, omissions, or “hard sell” tactics

For crypto promotions, the FCA also requires a prominent risk disclaimer and restricts “refer a friend” or incentive-based promotions.

4. Have the Right Contracts and Terms in Place

When customers sign up, they need to receive clear, accessible legal documents. At a minimum, you should have:

• Bespoke investment agreements or subscription terms-tailored to the specific product you’re offering
• A transparent Privacy Policy (see our GDPR compliance guide)
• Clear risk warnings and opt-in consent acknowledgements from investors
• Terms outlining your complaints and dispute process (required by the FCA)

Avoid using generic templates or copying documents-these need to be drafted professionally to protect your business and comply with regulations.

5. Audit Your Marketing Channels and Material

Every medium counts. FCA rules apply not just to brochures, emails, or PDFs-but also to:

• Your website
• Social media posts and ads
• Third-party platforms or affiliates
• Chatbots, mobile apps, and even messaging apps

Each channel must have compliant promotions, appropriate risk notices, and enforce “gates” to screen eligible recipients.

For more tips on keeping your online presence safe, see our guide to online business legal requirements.

6. Keep Thorough Records and Evidence of Compliance

The FCA can ask for proof you followed all the steps above. Keep records of:

• All promotional material and approval records
• Eligibility and appropriateness questionnaires
• Customer acknowledgements and signatures
• Complaints, queries, and how they were handled

Set periodic reviews just like you would for cybersecurity or data protection-keeping these records is just as crucial for compliance.

What About Marketing Cryptoassets and Digital Collectibles?

Crypto promotions are now firmly within the FCA’s scope. As of October 2023, the FCA’s Cryptoasset Financial Promotions Regime means you need FCA approval for most crypto marketing in the UK-even if you’re based overseas but targeting UK customers.

Special requirements include:

• Explicit, “pop-up” style risk warnings
• Bans on incentives (“Refer a friend and get free crypto”) and “call to action” wording
• Clear segregation of information for eligible and non-eligible investors
• Opt-in confirmation that the customer understands the risks, prior to purchasing

If you’re running a crypto platform or considering an NFT-based or tokenised investment, get tailored legal advice-this field is evolving rapidly and enforcement is only getting stricter.

Do You Need Any Other Licences or Approvals?

Depending on your business model, extra registrations and approvals could include:

• Anti-Money Laundering (AML) registration with the FCA, especially for crypto-related businesses
• Registration with the Information Commissioner’s Office (ICO) for data processing
• Local business registrations, if you offer in-person seminars or sales

Your legal requirements don’t end at marketing-so check out our guide to registering a business for other legal must-dos.

What Are the Consequences of Non-Compliance?

The risks of getting the rules wrong when promoting high risk investments are significant:

• Fines, penalties, or orders to refund investors if your promotions don’t meet FCA standards
• Criminal prosecution for unauthorised financial promotion-this can include company directors or staff personally
• Total bans from marketing certain types of investments
• Irreparable reputational damage if customers complain or regulatory findings are published

Enforcement is on the rise, especially for crypto and speculative investments. It’s not worth risking your business by skipping these steps.

How Can a Lawyer Help With High Risk Investment Marketing?

As you can tell, this isn’t an area for “guesswork” or copying what others are doing. A legal expert can:

• Review your business model and flag which regulations apply
• Draft FCA-compliant marketing copy, terms and conditions, and investment agreements
• Help you set up eligibility checks, risk disclaimers, and compliance processes
• Advise on crypto regulations, data protection, and cross-border compliance if you operate internationally
• Defend you if there’s an investigation or consumer complaint

Getting your legal foundations right-from day one-can save you from major headaches down the line and let you focus on growing your business the right way.

Key Takeaways

• High risk investments include products like mini-bonds, cryptoassets, and speculative unregulated offerings that carry a significant risk of loss.
• Marketing high risk investments in the UK is tightly regulated-especially under the FCA’s financial promotions regime.
• Businesses must only promote high risk investments to eligible investors, provide fair and prominent risk warnings, and pass robust appropriateness checks.
• You’ll need to hold FCA authorisation (or work with an authorised firm) to approve or communicate promotions for most high risk investments.
• Marketing documents, contracts, Privacy Policies, and customer communications should be professionally drafted to ensure compliance and reduce risks.
• Failing to comply with the legal requirements can lead to bans, fines, refunds, or even criminal prosecution against individuals as well as companies.
• Getting tailored legal advice from the start is the best way to protect your business-and yourself-when operating in this fast-moving market.

If you’d like support navigating the legal requirements for marketing high risk investments, or need help drafting FCA-compliant contracts and disclosures, our friendly legal experts are here to help. You can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat about your needs.