HM Treasury issued in June 2021 its Regulatory Framework for Approval of Financial Promotions Consultation Response.
The Consultation Response explains that the Government intends, subject to new legislation and an FCA consultation, to take the necessary steps to introduce a gateway for the approval of financial promotions of unauthorised persons. Under this gateway, the ability of an authorised firm to assess a financial promotion will be specifically assessed against the FCA’s objectives.
All new and existing authorised firms will be prohibited from approving the financial promotions of unauthorised persons. This will be implemented through the imposition of a requirement on their permission – the Financial Promotion Requirement. New and existing authorised firms that wish to approve financial promotions will have to apply to the FCA to have the prohibition removed either entirely (allowing them to approve all types of financial promotions), or partially (allowing them to approve certain types of financial promotions. Firms will do this using a variation of requirement (VREQ) application to the FCA. The FCA will determine, and accept or refuse, such an application under powers in Part 4A FSMA and it will be able to refuse an application if this is deemed necessary in order to advance its operational objectives.
Permissions to approve financial promotions could be limited to a specific type or type of products or services, dependent on the firm’s expertise. The proposed gateway is not intended to require the FCA to grant permission on promotion by promotion basis.
The Government is committed to implementing a transitional period for this change. It will also allow time for the FCA to determine applications for firms that do wish to carry on under the new regime.
The Government set out in its original consultation that it does not intend the new gateway to apply to firms approving the financial promotions of an unauthorised person within the same group, or to the approval of authorised firms’ own promotions for communication by unauthorised persons. In addition, the Government proposes to exempt from the gateway principals approving financial promotions for their appointed representatives in relation to regulated activities for which the principal has agreed to accept responsibility.
If you’d like to know more about how we can help you with your financial promotion approval arrangements, or any other regulatory compliance issues, our expert team is here to help.
Contact us today on 0207 436 0630 or email info@thistleinitiatives.co.uk.