FCA’s New Gateway for Financial Promotion Approval

Background

On 12 September 2023, the Financial Conduct Authority (“FCA”) published a Policy Statement (PS23/13) (the ‘‘Policy Statement’’), outlining its response to the feedback received in the Consultation Paper (CP22/27). The focus is on creating a new set of rules for authorised firms who approve, or intend to approve, financial promotions for unauthorised firms.

Currently, any authorised person can approve financial promotions for unauthorised firms. This has led to a concerning pattern where…

non-compliant financial promotions, which may be unclear or misleading, get approved and shared with consumers by unauthorised persons. As a result, consumers who rely on the information in these financial promotions, end up purchasing financial products that are inappropriate for their circumstances.

To address these issues and improve market integrity while ensuring that consumers receive clear and trustworthy financial promotions to make informed decisions, the Financial Services and Markets Act 2023 introduced modifications to the Financial Promotion Restriction. These changes essentially prohibit authorised persons from approving financial promotions of unauthorised firms, unless they seek approval from the FCA, subject to specific exemptions.

Key Points to Note

1. Starting from 6 November 2023, authorised firms can request permission through the FCA’s Connect portal to gain authorisation for approving financial promotions via the new regulatory gateway.
2. There will be a “transitional period” beginning on 7 February 2024, whereby authorised firms are allowed to continue approving financial promotions while the FCA assesses their applications.
3. The FCA has established specific timelines for processing the permission applications. Fully completed applications will be processed within 6 months, while applications that are incomplete will be given a 12-month processing period.
4. If the FCA decides to reject an application, promotions that were previously approved by the authorised firm during the transitional period will remain valid, and the firm must continue to fulfil its ongoing obligations.
5. Authorised firms that do not apply for permission through the regulatory gateway by 7 February 2024, may do so via a Variation of Permission. However, they will not be able to approve financial promotions until the FCA confirms the success of their application through this route.
6. Starting on 7 February 2024, it is expected that information about whether an authorised firm has permission to approve financial promotions will be publicly accessible.

Next Steps

When the new gateway comes into effect, all authorised persons who want to continue approving financial promotions for unauthorised firms will need to apply to the FCA for permission to do so (subject to certain exemptions).

Firms should evaluate whether they need to go through the gateway process to maintain their authorisation for approving financial promotions. If they plan to seek permission, they should start preparing the necessary application materials as soon as possible.

Cleveland & Co can support firms with the implementation of these updates and assist in preparing a thorough application for submission to the FCA, ensuring that it aligns with regulatory standards.

For more information, and any guidance or advice, Cleveland & Co, your External in-house counsel, are here to help.

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