Are you ready for the new financial promotions rules? - Thistle Initiatives

What has happened?

HM Treasury is consulting on how the FCA deals with financial promotions for unauthorised firms by introducing a new regulatory gateway. Under its current rules, an authorised firm can approve a financial promotion issued by an unauthorised one without a specific process to follow to check is it competent to sign off on the unauthorised firm’s advertisement. In its consultation, HM Treasury says this may not be a strong enough safeguard to ensure promotions are fair, clear and not misleading as required by FCA rules.

The Treasury’s paper, published in July with a consultation running until 25 October, proposes a regulatory gateway forcing firms to obtain approval from the FCA if they want to approve an unauthorised firm’s promotions. This would be introduced in order to strengthen the FCA’s ability to ensure that the approval of financial promotions operates effectively.

The Government has identified two policy options, set out below, to deliver the proposed gateway and is looking to implement only one of them:

• • Option 1 – Restricting approval of the financial promotions of unauthorised firms through the imposition of requirements by the FCA: This would involve amending FSMA to remove the general ability to communicate financial promotions which have been approved by authorised firms. FSMA would be amended so that unauthorised persons were able to communicate their own financial promotions only if these had been approved by a firm which had obtained consent from the FCA to provide such approval. The FCA would be empowered to impose a universal requirement on all existing authorised persons preventing them from approving the financial promotions of unauthorised persons.
  • Option 2 – Specifying the approval of financial promotions communicated by unauthorised persons as a regulated activity under FSMA: This would involve amending the Regulated Activities Order to make the approval of financial promotions of unauthorised persons a regulated activity, with firms requiring a Part IV permission from the FCA before they can undertake the activity. 

How can we help you?

If you’d like to know more about how we can help with your firm’s financial promotion arrangements or any other aspect of FCA compliance, our expert team is here to help. Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.