UK: Investment risk warnings to inform rather than scare

Why should I read this?

The Risk Warnings Review, commissioned by the Chancellor as part of the Leeds Reforms and undertaken by industry, government and regulators, has published its final report – “Supporting a New Retail Investment Culture”.   The Review finds that standard risk warnings — in particular the phrase "capital at risk" — deter consumers from investing and are widely misunderstood.  The Review sets out what firms can do now under the existing rules and identifies areas where the FCA could make changes to enable further progress.  The Review is accompanied by industry guidance and consumer research.

The Review is relevant to any firm that communicates with retail consumers about investment products.  This includes asset managers, platforms, advisers and distributors.

The Review follows on from the FCA guidance “Risk warnings for mainstream investments” as published on the FCA website in December 2025.

The Review’s findings

What does the Review recommend?

The recommendations fall into two categories:

• what firms can do now; and
• reforms the FCA can implement

What firms can do now

Firms do not need to wait for rule changes.  The Consumer Duty provides a foundation to improve risk communication today.  The FCA confirmed in their December 2025 guidance that firms do not need to use the phrase "capital at risk" to comply with risk disclosure requirements for mainstream investments.

The report publishes guidance alongside the Review to help firms move away from formulaic wording.

The report publishes consumer research by the Wisdom Council, which tested alternative wording against the standard "capital at risk" control statement.

Both variants were seen as more consumer-friendly, less legalistic and less negative than "capital at risk".  Both were more likely to encourage people to invest.

Reform of FCA and FOS regulation and supervision

Next steps

The Review proposes two measures to maintain momentum:

• convening an Implementation Forum, including the FCA, to discuss practical issues arising from the guidance; and
• reconvening the Review Steering and Technical Expert Group in six months to review progress and consider further actions.

What should I do?

Firms that communicate with retail investors about mainstream investment products should take the following steps:

What else do I need to know?

This Review is part of a broader push by government and regulators to encourage retail investment in the UK.  The Review sits alongside other initiatives, including the FCA's targeted support regime, the new CCI disclosure framework and the Advice Guidance Boundary Review.  Changes to risk communications will need to be considered in the context of these wider reforms.

The guidance does not create new regulatory requirements or safe harbours.  Firms will need to make their own judgment about how to apply the principles to their products and target markets.

Phil Spyropoulos, Financial Services Partner was closely involved in the Review and comments:

“This Review marks a turning point in how the industry can talk to consumers about investment risk. The evidence is clear: formulaic warnings do not help consumers make good decisions.  Boilerplate language can feel comfortable, but firms now have the confidence and the tools to move to a more effective approach.”

How Eversheds Sutherland can help

Eversheds Sutherland advises asset managers, platforms, advisers and distributors on all aspects of the UK regulatory framework for retail investment products. We help clients review and update their financial promotions, navigate the Consumer Duty and prepare for regulatory change.

The firm played a central role in the Risk Warnings Review, with Phil Spyropoulos co-leading the development of the industry guidance published alongside the Review.