Reverse ferret on financial promotion exemptions

The government is undoing recent changes to a couple of important exemptions to the UK financial promotions regime. Firms which rely on these exemptions have until 27 March to respond to the latest changes to the law.

New Order

Earlier this year an Order came into force which changed a couple of exemptions to the financial promotion restriction. For example, the Order:

• increased the financial thresholds for the high net worth individual exemption, and
• amended the criteria to be eligible for the self-certified sophisticated investor exemption.

These changes took effect on 31 January 2024 but will be superseded on 27 March 2024 when a new Order comes into force.

Round & Round

The reason for the about-turn is that stakeholders raised concerns about the changes. The tech sector and angel investors were among those worrying that the changes to the exemptions could impact the ability of start-up businesses to obtain investment.

The new Order reinstates the financial thresholds and criteria for these exemptions that were in place previously. Transitional measures mean that investor statements that comply with the old Order remain valid up to 30 January 2025.

Regret

The Financial Conduct Authority has made a statement which notes the change in approach. It repeats its view that the UK’s definition of a high net worth investor has a lower threshold than other similar countries. The FCA also believes that the criteria for investors to be classified as sophisticated should be tightened.