Financial promotions 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...

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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...

Scope and purpose of this Practice Note This Practice Note outlines the obligations contained in the Financial Conduct Authority’s (FCA) Conduct of business sourcebook (COBS) and signposts relevant materials. Firms authorised under the Financial Services and Markets Act 2000 (FSMA 2000) that undertake ‘designated investment business’ or ‘long‑term insurance business’ in relation to ‘life policies’ must comply with a broad range of high‑level, day‑to‑day conduct standards set out in COBS, which the FCA consistently emphasises. The purpose of COBS is to protect clients and ensure they are treated fairly (see COBS 1.1.1R and 1.1.1AR). The FCA also seeks to ensure that clients can always make effective, well‑informed choices. Separate FCA sourcebooks address conduct of business for: mortgage and home finance business (MCOB) insurance business (ICOBS), and banking (BCOBS) Alongside COBS and the Client Assets sourcebook (CASS), these reside within the Business Standards block of the FCA Handbook. This Practice Note does not cover conduct of business and client...

Overview The Financial Services and Markets Act 2000 (FSMA 2000) bars anyone from conducting a regulated activity in the UK unless they hold authorisation or are an exempt person; this is commonly called the general prohibition. A regulated activity means an activity of a specified type (namely, one identified in the FSMA 2000 (Regulated Activities) Order 2001, SI 2001/544) carried on by way of business in the UK. Breaching the general prohibition is a criminal offence, attracting a fine or imprisonment. This Practice Note sets out how the Financial Conduct Authority (FCA) acts against unauthorised business. Further material on unauthorised business is available in Practice Note: Unauthorised business—legal and regulatory framework. Key points include: the FCA’s supervision and enforcement functions focus on disrupting unauthorised firms and individuals seeking to defraud customers and on warning customers the FCA’s Warning List—a list of firms not authorised or registered by the FCA and which the FCA knows are operating without permission or running scams—is a vital tool for...