The UK's FCA has warned companies that selling complex ETPs to retail investors carries risks.

the UK Financial Conduct Authority (FCA) has expressed concerns about the way complex ETPs are sold to retail investors, warning that gaps in risk disclosure and customer due diligence could undermine the protections under the Consumer Duty. In a review report released on January 12, the FCA examined how companies of different sizes and business models market and distribute complex ETPs to individual investors.

The regulatory report shows mixed situations: some companies have good practices, clearly defining target markets, conducting strict assessments of customer knowledge, and continuously monitoring after purchase; however, some companies rely only on superficial or weak checks and disclosures, failing to effectively help retail investors understand the associated risks. The FCA stated that these weaknesses may expose investors to product risks they cannot fully understand.

Complex ETPs account for a small proportion of the overall market but carry higher risks. They include leveraged and inverse strategies as well as exchange-traded notes (ETNs) linked to cryptocurrencies. These product structures may amplify returns, but holding them for too long or during volatile markets can also accelerate losses.