Approving financial promotions


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Published
Feb 7th '24
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Firms which approve financial promotions must ensure those promotions follow Financial Conduct Authority’s (FCA) rules. Find out about approving financial promotions of unauthorised persons.

 

A financial promotion is an invitation or inducement to engage in investment activity (or claims management activity), that is communicated in the course of business. Financial promotions can take a wide variety of forms, including adverts placed through print, broadcast or online media, marketing brochures, emails, websites or social media posts.

 

On this page, where it refers to a ‘firm’, it means an authorised person approving a financial promotion of, and for communication by, an unauthorised person.

 

The financial promotion restriction in section 21 (s21) of the Financial Services and Markets Act 2000 (FSMA) means that a person must not communicate an invitation or inducement to engage in investment activity (or claims management activity), unless:

 

  • the person is an authorised person, ie generally authorised by the FCA or the Prudential Regulation Authority (PRA) under Part 4A of FSMA to carry on certain regulated activities;
  • the promotion has been approved by an authorised person, ie a s21 approver, who is lawfully able to approve that promotion; or
  • an exemption in the Financial Promotion Order 2005 (FPO) applies

 

Before a firm approves a financial promotion for communication by an unauthorised person, it must confirm that the financial promotion complies with FCA financial promotion rules. This includes ensuring that the financial promotion is fair, clear and not misleading.

 

FCA Non-Handbook guidance on approving financial promotions provides an overview of a s21 approver’s obligations and responsibilities. It is focused on the rules that apply to the approval of financial promotions for investments and, in particular, investments promoted to retail investors. However, the broad principles are also likely to be relevant to approving financial promotions in other sectors. It includes sections on:

 

 

A firm can only approve a financial promotion if the FCA has granted the firm permission  to do so, or the approval falls within the scope of an exemption from the requirement for permission. If you intend to begin approving the financial promotions of unauthorised persons, then you may need to apply for permission to do so. SUP 6A in the FCA Handbook contains guidance on applying for permission to approve financial promotions, and firms may find this page useful.

 

FCA permission is not required to approve financial promotions in the following circumstances:

 

  • approvals of financial promotions prepared by a firm’s Appointed Representatives (ARs), where the financial promotions relate to the regulated activities the AR is permitted to undertake under the responsibility of the firm.
  • approvals of financial promotions prepared by unauthorised persons within a firm’s corporate group
  • approvals of an authorised person’s own financial promotions for the purpose of communication by an unauthorised person

 

If you are granted permission to approve financial promotions, you will need to comply with the reporting requirements for approvers of financial promotions (also subject to the exemptions outlined above). This involves ad-hoc notifications to us about your approval activity and a bi-annual report.

 

Source: FCA

 

First published: 26/11/2019 Last updated: 07/02/2024

 

Page updates

  • 07/02/2024 : Information changed
  • 09/10/2023 : Information added
  • 09/02/2023 : Editorial amendment

 

Remember: Not everything is black and white when it comes to Financial Promotions, and many of the rules are open to interpretation. If you are unsure how your activities fit within the rules, please contact us.

 

LS Consultancy is ideally placed to support firms of all sizes and types with this Financial Promotions review.

 

Need some promotional advice? If you want to understand more about how to make sure your marketing materials meet FCA standards, please click here.

 

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