Partner Michelle Quinn has provided comment in Law360 on the potential impacts of the FCA’s support of tokenisation, intended to pave the way for asset managers to trade investment funds as digital assets, on its targeted support regime.

Discussing how advisers’ positions may shift as a result of the FCA’s latest move, Michelle noted: “There is a very real risk that the requirements for better outcomes, rather than only good outcomes, will incentivise advisors to recommend any product that might materially improve returns and access, in particular more innovative products such as digitalised funds.

“The practical implication is that more consumers will then be exposed to DLT related risks such as loss of private keys for digital wallets, platform outages, custodial failures and exposure of personal data if the ledger is hacked.”

She went on to outline the likely issues that will arise should digitalised funds grow in popularity, stating: “If digitalised funds take off, issues are likely to arise in respect of compliance, data protection, and operational resilience and it will not be possible to anticipate every possible issue in advance. Issues may be more marked in the targeted support scheme where advice is offered on a cohort basis rather than a more individualised model.

“To ensure consumers are adequately protected, some revision to the targeted support scheme may be necessary – it could also lead to a convergence between better outcomes under the targeted support regime and good outcomes under the Consumer Duty. If that convergence leans more towards the better outcomes side of the spectrum, it will be imperative that the increased risks associated with more innovative investments are monitored and managed appropriately and fully disclosed to consumers.”

Michelle’s comments were published in Law360, 17 October 2025.