The FCA Perimeter Report

by Paul Kelly, Chief Executive Officer, Linear Investments

I have always been interested to read the FCA’s Perimeter Report, as, apart from providing guidance about what just the FCA are responsible for and perhaps as importantly what they are not, it also gives an overview of a really important part of the FCA’s role in the industry: horizon scanning. Past Perimeter Reports are a great way of understanding what is important in terms of updates and new regulatory considerations at any given time.

Reading back to the FCA’s Perimeter Report of 2018/2019: “we are horizon scanning to anticipate future market developments. Most recently, for example, we have carried out significant work on cryptoassets and are considering these issues internationally. Looking ahead, we know that technology companies entering the financial services sphere are likely to have a major impact on both firms and consumers in the UK, even if their activities fall outside the perimeter. We will keep this under constant review.”

A more recent Perimeter Report states: “Where consumers are speculating on the value of cryptoassets – buying them with the hope of making a profit – we have seen increased risks for retail customers and the market. This includes a range of activities, from speculative purchases to more complex propositions claiming to offer retail consumers significant long-term returns. Recent market volatility has demonstrated consumers are both at risk of quickly depreciating values, but also potentially not being able to make withdrawals as some firms have faced liquidity issues. We continue to remind consumers with warnings that they should not buy these products unless they are prepared to lose all their money.

Following the Treasury’s decision to extend the scope of the financial promotion regime, we consulted in January 2022 to strengthen our financial promotion rules for high risk investments, including cryptoassets. We are currently reviewing the responses to the consultation and will provide updates on rules later this year.”

We are in a time of great political, and maybe more importantly, geopolitical change. World events affect financial markets, supply chains, production. Investing can be complex and fast moving. The two statements above from the FCA report are testament to that. It gives me comfort to know the regulator is showing agility and competence, and this was also clear in the recently published 3 year strategy (read more) where the resources of the regulator will be on preventing serious harm and setting higher standards for competition. Cryptoassets are just one area of many under consideration by the FCA.

Linear has been part of the global financial market for a number of years, showing a level of competency and reliability not matched by many of our competitors. Our clients, and indeed potential future clients have assurance that we have built a business designed to support their business needs in the long term, regardless of what the future holds for the financial markets.