financial promotions

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The final guidance clarifies the scope and application date of the rule, and answers questions around good practice and accessing third-party data.

By Nicola Higgs and Jaime Martin

On 23 April 2024, the FCA published its final guidance (FG23/4) on its new anti-greenwashing rule, which comes into force on 31 May 2024. The anti-greenwashing rule will require all authorised firms to ensure that any reference they make to the sustainability characteristics of their financial products and services are…

Abstract view of a skyscraper

The proposed amendment seeks to modify the existing framework of FINRA Rule 2210 to accommodate the use of certain projections and targeted returns.

By Stephen P. Wink, Marlon Paz, Gail Neely, Naim Culhaci, Matthew Lee, and Deric Behar

On November 13, 2023, the Financial Industry Regulatory Authority (FINRA) filed a proposed rule change with the Securities and Exchange Commission (SEC) to amend FINRA Rule 2210. If adopted, the amendment would permit FINRA-regulated firms to include certain performance projections or targeted returns with respect to a security or asset allocation or other investment strategy in their communications with certain recipients.

Cloudless day at financial district of London

Businesses relying on exemptions for high net worth individuals and self-certified sophisticated investors should ensure they are prepared to comply with the updated requirements.

By Rob Moulton, Nicola Higgs, and Charlotte Collins

On 7 November 2023, HM Treasury published the response to its consultation on reforming the financial promotion exemptions for high net worth individuals and self-certified sophisticated investors. These exemptions are set out in Articles 48 and 50A of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the FPO), respectively. They enable financial promotions for unlisted companies to be made to individuals who satisfy the relevant conditions, and were originally designed to assist unlisted companies with raising capital.

HM Treasury and the FCA are concerned that the exemptions, which have not been updated since 2005, are outdated as the financial thresholds have not been raised. This has meant that more individuals have been able to qualify for the exemptions. HM Treasury and the FCA have also been concerned that some businesses have been inappropriately using the exemptions to market investments to ordinary retail investors, including by coaching individuals to self-certify.

Regulator clarifies that existing FCA rules will continue to apply but will also reflect the evolving landscape of financial promotions on social media.

By Nicola Higgs, Stuart Davis, Fiona Maclean, Gabriel Lakeman, and Gary Whitehead

On 17 July 2023, the FCA published a guidance consultation (GC23/2) relating to financial promotions on social media.

Acknowledging that social media is “being used by many consumer as a go-to source of information”, the FCA is updating its existing guidance on social media and customer communications to take into account the changing landscape of social media. The existing guidance, FG15/4: Social Media and Customer Communications, will be retired once the new guidance is finalised.

The Future Regulatory Framework and Consumer Duty will be key areas of focus for the coming year.

By Rob Moulton, Nicola Higgs, David Berman, Becky Critchley, and Charlotte Collins

On 5 April 2023, the FCA published its Business Plan for 2023/24. The Business Plan sets out a number of priority areas for the regulator, tied into its three main areas of focus: reducing and preventing serious harm, setting and testing higher standards, and promoting competition and positive change.

The FCA highlights four of these priority areas that will receive additional emphasis over the coming year. These priority areas indicate a strong focus on developing the Future Regulatory Framework, including consulting on Handbook Rules to replace elements of onshored EU legislation as well as progressing the Edinburgh Reforms; and on consumer protection, including effectively implementing the new Consumer Duty.

The regulator described the steps it is taking to increase scrutiny of advertisements about financial products and services on social media platforms.

By Rob Moulton, Jonathan Ritson-Candler, and Sara Sayma

On 3 February 2023 the FCA published an analysis of its financial promotions data for 2022. The data reflects the action taken against authorised firms for breaching financial promotion rules and referrals and investigations into unregulated activity over the last year. As part of its analysis, the FCA emphasised the link between good quality marketing information and good consumer outcomes.

HM Treasury has confirmed that it will bring certain unregulated cryptoassets within scope of the financial promotions regime.

By Stuart Davis, Rob Moulton, and Charlotte Collins

On 18 January 2022, the UK government confirmed its intention to bring the promotion of certain cryptoassets into scope of regulation. HM Treasury has been considering for some time whether, and if so how, to bring unregulated cryptoassets within the regulatory perimeter, having originally consulted on these proposals in 2020.

This annual publication outlines some of the primary focus areas in 2022 for UK-regulated financial services firms. There has been a marked shift away from dealing with immediate post-Brexit priorities to more fundamental consideration of the direction of travel of UK financial services regulation, and this is borne out across many of the topics covered in this year’s publication.

While monitoring regulatory divergence between the UK and the EU will be a key theme for 2022, other familiar topics will…

HM Treasury is planning significant changes to the financial promotion regime, including expanding its scope to certain cryptoassets, and amending the approval process for promotions of unauthorised firms.

By Stuart Davis, Sam Maxson, and Anna Lewis-Martinez

On 20 July 2020, HM Treasury published two consultation papers on a regulatory framework for approval of financial promotions and cryptoasset promotions. The consultations propose to establish a regulatory “gateway” that a firm must pass through before it is able to approve the financial promotions of unauthorised firms, and to bring certain types of cryptoassets into the scope of financial promotions regulations.