The FCA has published a policy statement (“PS23/13”) on introducing a “gateway” for firms that approve the financial promotions of unauthorised firms. PS23/13 supports amendments made to the Financial Services and Markets Act 2000 (“FSMA”) by the recently enacted Financial Services and Markets Act 2023 (“FSMA 2023”). PS23/13 also follows the FCA’s consultation paper (“CP22/27”), which was published in December 2022 on the gateway’s proposed operation and related issues.
A financial promotion is any invitation or inducement to engage in investment activity, and covers the promotion or marketing of investment services and/or financial products/investments. The current rules allow authorised firms to approve financial promotions on behalf of unauthorised persons, whereas the new rules will require authorised firms to receive additional permission from the FCA before they can do so.
Therefore, the new gateway permissioning requirement will affect FCA authorised firms that approve, or intend to approve, financial promotions for unauthorised persons, as such authorised persons will now need to apply for and receive permission from the FCA to be able to carry out such activities. However, exemptions from the permissioning requirement are available for certain authorised persons, including the following:
- financial promotions prepared by unauthorised persons within the same corporate group as the authorised person;
- financial promotions prepared by the authorised person’s appointed representatives (“ARs”) (even if their ARs are unauthorised persons), where the promotion relates to a regulated activity for which the authorised person has agreed to accept responsibility; or
- their own financial promotions that are to be communicated by unauthorised persons.
In response to feedback to CP22/27, the FCA has made targeted changes to its proposals on how to implement the gateway, designed to ensure the new rules are proportionate. The FCA’s finalised approach comprises, among other things:
- how it will assess applicants at the gateway and the basis for granting or refusing applications, with Annexes 1 and 2 to PS23/13 setting out the questions applicants will be asked and the requirements they will need to meet;
- reporting requirements for firms that are granted permission to approve financial promotions, designed to ensure the FCA has the necessary data to help it supervise and understand the approval market; and
- updated non-Handbook guidance for firms that approve financial promotions for investments (contained in Annex 3 to PS23/13).
- PS23/13 also summarises feedback the FCA received on a consultation on the fees for gateway applications (“CP22/23”), stating that the FCA remains satisfied with a Category 5 application fee (currently £5,000) for applications to the gateway.
Appendix 1 to PS23/13 contains a draft of the Financial Promotion (Approver Permission) Instrument 2023, which sets out the FCA’s near-final rules and guidance on fees, applications and approvals. This Handbook instrument has not yet been made by the FCA Board, however, the FCA’s intention is that firms will be able to submit applications for permission to approve financial promotions from 6 November 2023. This initial application period will close on 6 February 2024.
On 7 February 2024, the new statutory provisions will be implemented and firms that have not applied to the gateway will no longer be able to approve financial promotions for unauthorised firms (subject to the above exemptions). Firms that have applied during the initial application period will be able to continue approving financial promotions for unauthorised persons while the FCA determines their application.
To help firms to prepare their applications, the FCA has also published a new webpage on applying to approve financial promotions for unauthorised persons.
PS23/13, CP22/27, CP22/23 and the FCA’s webpage are available here, here, here and here.