By Natalie Stewart & Drew Salvest
HM Treasury has opened a consultation regarding a regulatory gateway for authorised firms approving the financial promotions of unauthorised firms. Responses to the consultation are sought by 25 October 2020 and the government is particularly interested in responses from authorised firms currently approving the promotions of unauthorised persons, retail consumers and unauthorised persons which communicate financial promotions. Unauthorised firms who rely on authorised persons to enable them to market products in the UK should consider approaching their usual approving firms to ensure any implementation of this consultation does not inhibit market access.
Regulatory Background
Financial promotions (“Promotions”) are restricted under Section 21 of the Financial Services and Markets Act 2000 (“FSMA”), pursuant to which a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless the Promotion has been made or approved by an authorised person or it is exempt. Unauthorised firms often use authorised firms which are authorised to carry on a regulated financial services activity to approve their Promotions in order to comply with the regulations (the “Authorised Persons Approval Route”).
Authorised firms are not required to notify the Financial Conduct Authority (the “FCA”) once they have approved an unauthorised firm’s Promotion, nor does the FCA sign off on approved Promotions before they are communicated to consumers. As such, the FCA is only made aware of potential breaches of the relevant regulations. Continue reading “HM Treasury Consultation on the regulatory framework for the approval of financial promotions”