The FCA has proposed new measures to clamp down on illegal, unfair or misleading financial marketing.
In CP22/27- Introducing a gateway for firms who approve financial promotions, the regulator outlines new checks for firms that wish to approve financial promotions. The new measures will require firms to demonstrate they have the right expertise for the promotions they wish to approve.
Under current rules, any FCA authorised firm is allowed to approve financial promotions on behalf of other firms who are not authorised by the regulator. The changes being introduced will require authorised firms to undergo a new screening process before they are allowed to approve financial promotions. Firms will also be required to regularly report back to the FCA on financial promotions they have approved.
The consultation focuses on the following aspects of the proposed gateway:
- How the FCA will assess applicants at the gateway;
- The basis for the FCA granting or refusing applications;
- A bi-annual reporting requirement for firms that are given permission to approve financial promotions;
- A requirement for firms that are granted permission to approve financial promotions must notify the FCA when they approve, or amend or withdraw approval of, a financial promotion, within 7 days of doing so;
- Not extending the compulsory jurisdiction of the Financial Ombudsman Service to the approval of financial promotions; and
When the new regime comes into force, though, a firm that wants to be able to approve financial promotions will need (subject to some exceptions) to apply to the FCA for permission to do so.
The exceptions may mean that an authorised firm would not have to apply to the gateway where it is only approving financial promotions which are:
- of its own for onward communication by an unauthorised firm
- for an unauthorised business in its corporate group
- for its Appointed Representatives, where the promotion relates to a regulated activity for which the Principal has the relevant permissions and has agreed to accept responsibility.
The FCA does not expect its proposals to be generally relevant to authorised persons which fall within one of these exceptions.
The proposed reforms aim to ensure that the FCA can act quickly to put a stop to harmful financial promotions communicated by unauthorised firms, including in areas such as high-risk investments and Buy Now Pay Later.