Financial promotion order meaning

Although the government chose not to advance a proposal to give firms a heavier burden of responsibility, the reforms still carry real weight for companies and investors. They tighten the eligibility tests and enhance both investor declarations and compulsory information standards. Businesses must be compliant by the go-live date. Those seeking capital under the financial promotion exemptions will have to include additional disclosures in their investor communications. This is intended to help prospective investors perform basic due diligence on the person’s investment marketing, and to support the Financial Conduct Authority (FCA) in examining possible non-compliance with the exemptions. HM Treasury consulted two years ago on revisions to the financial promotion exemptions in the Financial Promotion Order for high net worth individuals and sophisticated investors. In its November 2023 consultation response, the government set out the final changes, which take effect from 31 January 2024. Below, we look at what companies should note to remain compliant with the updated conditions in the revised exemptions and offer a few practical pointers for...

The Order confirms that qualifying cryptoasset staking arrangements are not considered a collective investment scheme for the purposes of section 235 of the Financial Services and Markets Act 2000 (FSMA 2000). A collective investment scheme is widely defined to capture any arrangement for managing property of any kind that allows those taking part to obtain profits or income generated by acquiring, holding, managing, or disposing of that property. Staking: an outline Before addressing the implications of the Staking Order, it is helpful to clarify cryptostaking. Broadly, it involves locking a cryptoasset within a blockchain network to help run that network—such as by validating transactions—in return for rewards paid to the owner of the staked assets. Staking is chiefly associated with proof‑of‑stake and similar blockchain consensus models. Establishing consensus over transactions and verifying them is fundamental to how a blockchain functions. Proof‑of‑stake contrasts with proof‑of‑work, where miners of cryptoassets, such as bitcoin, must solve complex puzzles to confirm transactions. In proof‑of‑stake, a blockchain participant is selected...

In a review published in early August 2024, the FCA detailed examples of both sound and poor conduct by eight firms against its own crypto-financial promotion rules. It also spelt out its expectations—seen by some lawyers as edging into 'regulatory creep'—and firmly warned it will act if firms do not now raise standards. Practitioners are especially uneasy about the regulator’s demand that crypto-businesses deploy the mandatory 'appropriateness assessment' to judge whether products truly suit consumers. According to Paul Harris, a partner at Osborne Clarke LLP, the FCA’s approach risks drifting from appropriateness into claimability analysis, particularly where its review concludes that firms must gather far more customer information in order to work out whether the product is genuinely and demonstrably suitable for them in practice. Legacy EU provisions under the Markets in Financial Instruments Directive (MiFID) clearly define what an 'appropriateness' check entails, and how that differs from a suitability test. Testing 'Appropriateness' An appropriateness check considers whether a client possesses the knowledge and experience to engage with...

Background to the regulation of cryptoasset promotions in the UK Following the establishment of the Cryptoassets Taskforce (CATF) in March 2018, by October 2018 the CATF had issued its final report. Chapter 4 considers the risks and potential advantages linked to cryptoassets. On financial promotions, the report observes that advertising, often directed at retail investors, is frequently neither fair nor clear and may mislead. Commonly, adverts: overstate the benefits; rarely flag volatility risks, the reality that consumers can both gain and lose their investment, and the absence of regulation; include cases where regulated firms market cryptoasset products without making clear that this aspect of their business is not regulated. After the report’s publication, the UK government began consulting on legislation to bring certain cryptoasset promotions within the Financial Services and Markets Act 2000 (FSMA 2000), and therefore under the Financial Conduct Authority’s (FCA) remit. In parallel, the FCA opened a consultation on the requirements that would apply to financial promotions...

This Practice Note summarises the rules that govern credit limits. A borrower is allocated a credit limit by the creditor, being the highest amount of credit available to be drawn under a running credit agreement, for example a credit card facility. It applies to running credit arrangements, including credit cards, for the customer concerned only. Definition of credit limit A credit limit operates in running-account credit agreements and represents the maximum debit balance that may, under a credit agreement, remain outstanding on the account, ignoring any contractual term permitting that maximum to be temporarily exceeded. ‘Running-account credit’ is defined in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, SI 2001/544, art 60L (RAO) and includes credit cards. in advertising When a financial promotion states an interest rate or an amount relating to the cost of credit, whether shown as a monetary sum or as a proportion of a specified amount, creditors must provide a representative example, which must include the total amount of...

1. What is the applicable legislation? Uruguay lacks a broad, cross‑cutting regime for screening foreign investment. In this respect, the authorities encourage all investment, without discrimination between local and foreign investors. Nevertheless, operating in certain industries demands prior authorisation or dedicated, sector‑specific licences in order to commence activities. Additionally, some areas impose particular rules aimed at identifying the ultimate owners of the capital invested and, in some instances, require participation through a locally incorporated entity that will be subject to Uruguayan regulation. Sectors commonly needing prior authorisation include the national financial system, activities requiring environmental permitting, mobile telecommunications services and long‑distance telecommunications services. Outside the sphere of the traditional State monopolies, there appears to be no support for reserving so‑called strategic sectors solely to Uruguayan capital. Uruguayan legislation has established a legal framework to promote investments across various fields and activities. Law No 16,906 of 1998 (the Investments Law) declares as a matter of national interest the promotion and protection of investments made in Uruguay by Uruguayan and foreign...