FSA: Tax relief on investments should be advertised as high-risk
15 July 2011 at 16:52
Firms using tax relief on enterprise investment schemes to attract customers should be clear about the risks, the Financial Services Authority (FSA) has claimed.
The regulatory body's recent Financial Promotions Industry Update said that the increase on relief was likely to result in increased demand for such products.
However, it warned that these investment are still high-risk and should be advertised as such.
"Our concern is that they may be marketed to consumers based primarily on the tax incentives offered, with investors not fully understanding the risks involved," the FSA said.
It said that firms considering entering the marketplace should mull over a number of factors, including that the FSA sees the "overarching principle for financial promotions is that they should be clear, fair and not misleading".
The body suggested that businesses advertising investment schemes by highlighting the tax benefits ensure that they do so in a balanced way.
In other news, the FSA recently published its discussion with major financial bodies about the potential reform of the supervision of the banking system.
Posted by Tony Miller