A&O Shearman | FinReg | UK Financial Conduct Authority Publishes Policy Statement on Financial Promotions Gateway
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  • UK Financial Conduct Authority Publishes Policy Statement on Financial Promotions Gateway

    The U.K. Financial Conduct Authority published a Policy Statement on 12 September 2023 setting out how it intends to implement the new regulatory gateway for financial promotions. The Financial Services and Markets Act 2023 (which we discuss in our client note, "A Boost for U.K. Financial Services") amends the Financial Promotion Restriction, banning authorized firms from approving financial promotions of unauthorized firms unless they have received approval from the FCA to have the prohibition removed in whole or part. The gateway will apply from February 7, 2024, with authorized firms able to apply to the FCA for permission from November 6, 2023 until February 6, 2024. There are exemptions from the gateway, entering into force on September 27, 2023, which permit the approval of financial promotions by authorized firms, for communication by unauthorized firms, in certain circumstances.

    The Policy Statement confirms that:
    • existing authorized firms will be able to apply for a variation of permission through the FCA's Connect portal from November 6, 2023, in order to obtain permission to approve financial promotions through the new regulatory gateway; these firms will be able to continue approving financial promotions during a "transitional period" (commencing on February 7, 2024), while the FCA determines their VOP application;
    • the FCA must determine complete applications within 6 months and incomplete applications within 12 months;
    • even if the FCA refuses an application, any promotions approved by that authorized firm during the transitional period will remain valid and the firm's continuing obligations will also remain applicable;
    • authorized firms that do not apply for permission through the regulatory gateway before February 7, 2024 will be able to do so at a later date via a VOP for permission to approve, but will be unable to approve financial promotions of unauthorized firms from that date until they receive permission;
    • information about an authorized firm's permission to approve financial promotions is expected to be made available on the FCA Register from February 7, 2024.

    The Policy Statement also describes the approach the FCA will take when assessing applications. Firms should notify the FCA when they approve promotions for qualifying cryptoassets and non-mass market investments (a recently introduced categorization for securities deemed to be high risk, introduced under the FCA's recent rule changes). Bi-annual reporting requirements will be introduced for all firms, informing the FCA of information such as the total number of approvals made, and consumer complaints received regarding approved promotions. Authorized firms should also consider their broader regulatory responsibilities when approving financial promotions of unauthorized firms, e.g., requirements under the Consumer Duty (which came into force in July this year), as well as potential upcoming regulatory changes, such as the proposed anti-greenwashing rules (for which the FCA plans to publish a final policy statement in Q3 2023).

    The U.K. financial promotions regime will apply to the provision of certain cryptoasset services from October 8, 2023. For the time being, cryptoasset firms that are registered with the FCA for anti-money laundering purposes will not need to apply for FCA approval to make financial promotions under the new regulatory gateway but may not approve the financial promotions of any other firms, authorized or unauthorized. The exemption is temporary and is expected to be revisited once the U.K. has implemented a broader regulatory regime for cryptoassets.

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