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UK FCA Consultation: New Section 21 Permission‑Based Gateway for Approving Third‑Party Financial Promotions, Reporting Duties and Consumer Duty Implications (High‑Risk Investments, Cryptoassets and BNPL)

Published on: 10 February 2023

Published by a Law360 reporter
Legal News
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Article summary

The consultation sets out how the FCA plans to operate a new regulatory gateway that would:

  • place an automatic curb on FCA‑regulated firms that sign off financial promotions created by third parties
  • require any firm wishing to keep approving promotions for others to apply to the FCA to have that approval ban lifted

A tightening of the perimeter for financial promotion approvers was explored in July 2020 in a consultation response, where HM Treasury expressed concern that the current approval framework is inadequate, as authorised firms face no dedicated assessment before they may approve the financial promotions of unauthorised firms.

The document identified three potential risk areas, including:

  • insufficient expertise within approver firms: because financial promotions span a wide array of products and services, authorised firms can end up approving material beyond their competence, risking content that is misleading, inaccurate, or unsuitable for the target audience
  • weaknesses in approver firm due diligence: the FCA’s guidance says authorised firms should evaluate both presentation and substance before granting approval...

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