New regulatory gateway for marketing financial services to apply from 7 February 2024.
Affects businesses which rely on regulated firms to approve their ads, as well as the approvers themselves.
HM Treasury has made regulations to bring parts of the Financial Services and Markets Act 2023 into force. FSMA 2023 creates a “gateway” for firms that approve other firms’ financial promotions. The latest regulations set the timetable for this gateway to take effect, including transitional provisions.
For an authorised firm that approves or seeks to approve financial promotions for an unauthorised firm, the key dates are:
- 6 September 2023 – the FCA may from this date give directions, guidance and make rules relating to the new financial promotion gateway
- 6 November 2023 – the application window opens, meaning that authorised firms can start to apply for permission from the FCA to approve others’ financial promotions from this date
- 6 February 2024 – last day to apply for the FCA’s permission to benefit from grandfathering into the new regime
- 7 February 2024 – the new regulatory gateway for the approval by an authorised firm of financial promotions of unauthorised firms will apply
Under the gateway authorised firms must have FCA permission to approve financial promotions. However, an authorised firm that applies for the FCA’s permission before 7 February 2024 but does not receive the permission by this date can continue to approve financial promotions until its application is determined.
How to become an approver of financial promotions for unauthorised firm
The application process will involve submission of a variation of permission (VOP) to the FCA by an authorised firm to have their requirement varied (allowing them to approve certain types of financial promotions) or cancelled (allowing them to approve all types of financial promotions). Applicants for authorisation who want to apply for permission to approve financial promotions can apply for both at the same time so they can approve promotions for an unauthorised firm from day 1 of their authorisation.
The FCA in its Consultation Paper on Introducing a gateway for firms who approve financial promotions (CP22/27) published in December 2022 (see our earlier blog post) has given some guidance around their expectations. Our view is that for an authorised firm that already makes certain types of financial promotions, it would be easier to demonstrate that they will be able to approve similar financial promotions for an unauthorised firm. However, if the nature of financial promotions that they seek to approve is fundamentally different from the ones that they currently make, that might require enhancement of systems and controls, and significant uplifts at the authorised firm’s end. Such assessment will have to be made on a case-by-case basis.
Looking ahead, HM Treasury may set exemptions from the requirement for approvers to seek FCA permission. FSMA 2023 gives HM Treasury power to provide for exemptions from such a requirement through secondary legislation.