HM Treasury has launched a consultation on proposed changes to the financial promotion exemptions for high net worth individuals and sophisticated investors. The aim of the proposals is to mitigate the misuse of the exemptions by some firms marketing inappropriate products to ordinary retail customers and to update certain aspects that were introduced about 20 years ago. The Treasury Select Committee's report on the failure of London Capital & Finance recommended that the exemptions be rethought to ensure greater consumer protection. The consultation closes on March 9, 2022.
The main proposals are:
These proposals tie in with other changes or potential changes to the U.K. financial promotion regime. Two significant changes are the introduction by the government of a regulatory gateway for approval by authorized firms of promotions of unauthorized firms and the FCA's proposals to strengthen the financial promotion rules to reduce consumer harm arising from investing in inappropriate high-risk investments that do not meet a customer's needs. Specific proposals on changes to the rules are expected in Q1 2022.
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