Financial Promotions for Unauthorised Persons - What You Need to Know

Be aware, new #FCA permission maybe required if you are approving financial promotions! In particular, 

• if you approve financial promotions for unauthorised persons, you need to apply to us for permission to approve financial promotions by 6 February 2024 to avoid interruption in their ability to do this (subject to exemptions) 

• From 7 February 2024, all part 4A authorised firms will see the ‘What can this firm do in the UK?’ section of their Financial Services Register page change to reflect their ability to approve financial promotions. 

This follows previous communications from the FCA to regulated firms setting out the introduction of a new gateway (a.k.a permission) for firms who approve financial promotions. After Treasury made the relevant commencement regulations in August 2023, the FCA published their policy statement (PS 23/13) on 12 September 2023. This set out our final rules relating to the new gateway and approach to implementation. 

Financial Promotions - Why is there a requirement? 

Under s.21 of FSMA, only FCA approved firms can issue a financial promotion. If you are not an FCA authorised firm, you must find one who can sign off your financial promotions (called, s.21 approval / sign-off). There are exemptions from the restriction in Section 21, i.e. circumstances in which unauthorised persons can communicate financial promotions without needing the approval of an authorised person. These are set out in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (‘FPO’). PERG 8 provides extensive guidance on the financial promotion regime. 

The new regime… 

Until the 7 February, all FCA authorised firms can provide a s.21 sign-off to unauthorised firms. However, once the new gateway comes fully into effect on 7 February 2024, authorised persons will only be able to approve financial promotions if: 

• they have been granted specific permission by us to do so; 

• they benefit from the transitional regime; or 

• their approval falls within an exemption from the need for permission. In broad terms these exemptions cover approvals of firms’ own promotions, those of their group members and (to a certain extent) those of their appointed representatives. Please see the guidance at PERG 8.9.1A G. 

The initial application window for firms to apply for permission to approve financial promotions opened on 6 November 2023 and closes on 6 February 2024. 

Firms that do not apply on or before 6 February 2024 will, from 7 February 2024, be subject to a restriction which will mean they cannot approve financial promotions for unauthorised persons other than within the scope of one of the exemptions described above (note that these are different to the exemptions in the FPO). 

Firms that apply during the initial application window will benefit from a transitional regime and will be able to continue approving financial promotions whilst their application is being determined. 

Firms can still apply for permission to approve promotions on or after 7 February 2024, but they will not be able to approve financial promotions (other than within the scope of the exemptions) unless and until their application has been granted. This timetable is set out in legislation and is not therefore something that can be changed by the FCA. 

For firms that apply for permission to approve financial promotions on or before 6 February 2024, new notification and reporting requirements will apply from 7 February 2024. These rules, and their application during the transitional period, are set out in SUP 16.31 and SUP TP 14. Applicant firms will need to ensure they are ready to comply with these rules. 

What Next? 

If you need help navigating the guidance or any aspect of your regulatory responsibilities please do not hesitate to get in touch.