Exemptions from UK Financial Promotions Gateway Published09/11/2023The Financial Services and Markets Act 2000 (Exemptions from Financial Promotion General Requirement) Regulations 2023, which come into force on September 27, 2023, set out the exemptions to the new U.K. regulatory gateway for the approval by authorized firms of financial promotions of unauthorized firms. The Financial Services and Markets Act 2023 (which we discuss in our client note, "A Boost for U.K. Financial Services: The U.K. Financial Services and Markets Act 2023") amends the Financial Promotion Restriction, banning authorized firms from approving financial promotions of unauthorized firms unless they have received approval from the Financial Conduct Authority to have the prohibition removed in whole or part. The prohibition will apply from February 7, 2024, according to the Financial Services and Markets Act 2023 (Commencement No. 2 and Transitional Provisions) Regulations 2023, which also set out the following timeline for the new regime to come into effect:
- September 6, 2023: provisions will apply that enable the FCA to give directions and guidance and to make rules.
- November 6, 2023: provisions will apply that allow the FCA to receive (but not determine) applications to approve financial promotions that are made during the application period (November 6, 2023 to February 6, 2024).
The new Financial Services and Markets Act 2000 (Exemptions from Financial Promotion General Requirement) Regulations 2023 provide for three exemptions from the general gateway prohibition. These exemptions will apply to the approval of a financial promotion by an authorized firm, for communication by an uanuthorized firm, where the content of the financial promotion is "prepared by":
- The authorized firm.
- An unauthorized firm where the unauthorized and authorized firms are in the same group.
- An unauthorized firm which is an appointed representative of the authorized firm and the communication relates to a regulated activity for which the authorized firm has agreed to accept responsibility.
The "prepared by" wording seems clumsy, since it might allow an authorized firm to prepare the promotions of a Ponzi scheme operator, by working with them on the materials without the gateway being invoked. According to the explanatory memorandum, the first exemption is intended to ensure that no FCA approval is needed where an authorized firm prepares its own financial promotion for communication by an unauthorized firm.
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