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Retail investors are being pushed into purchasing higher risk products that expose them to more risk than they can afford, the Financial Conduct Authority (FCA) has warned.In its annual report on the areas that could harm consumers, the City watchdog said that the sale of "unsuitable or fraudulent products" represents the most significant harm in the retail investment sector.Read more: Incoming BoE head Andrew Bailey to be grilled by LCF mini-bond investigationBut the FCA warned today that some of the highest risk products are offered by companies that are not regulated, while others are being marketed by firms that are only regulated for other activities. "These are often marketed directly to retail consumers, often with poor communication of the real risks and implying that the investments are regulated, when they are not," said the watchdog. There have been a series of regulatory clampdowns on high risk investments in the wake of scandals including the collapse of mini-bond seller London Capital & Finance (LCF).In November, the watchdog set out to ban the mass marketing of speculative mini-bonds such as those sold by LCF to ordinary investors, but the FCA is only able to regulate the selling of the bonds, not the products themselves. The government was criticised by MPs in October for refusing to back a policy that would allow the financial watchdog to recommend changes to its remit, after FCA chairman Charles Randell warned that "bad people" were exploiting regulatory loopholes. Sign up to City A.M.'s Midday Update newsletter, delivered to your inbox every lunchtimeOutgoing FCA boss Andrew Bailey, who will take over from Mark Carney as governor of the Bank of England next month, recently described investors' exposure to higher risk assets as "one of the things that
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