PS23/13: Introducing a gateway for firms who approve financial promotions

Read PS23/13 (PDF)[2]

October 2023 update

This page was updated to reflect the FCA Board's decision on 26 October 2023 to make the rules referred to in the policy statement. The changes to the rules since they were published as near final are described in Handbook Notice 113[3].

November 2023 update

Further page updates as:

• The Treasury has laid the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) (No. 2) Order 2023[4] which includes amendments to The Financial Services and Markets Act 2000 (Exemptions from Financial Promotion General Requirement) Regulations 2023.
• The initial application period for firms to submit applications for permission to approve financial promotions opened on 6 November 2023.

What we are changing

This policy statement supports legislative changes by the Government within the Financial Services and Markets Act 2023[5]. Once the new gateway comes fully into effect on 7 February 2024, all authorised persons that want to approve financial promotions for unauthorised persons will need permission from us to do so (subject to certain exemptions).

We have made several targeted changes to our proposals[6] for how to implement this gateway in response to consultation feedback. Our finalised approach, set out in the policy statement, includes:

• how we will assess applicants at the gateway and the basis for our granting or refusing applications
• reporting requirements for firms that are granted permission to approve financial promotions
• not extending the compulsory jurisdiction of the Financial Ombudsman Service to the approval of financial promotions
• updates to our non-Handbook guidance for firms that approve financial promotions for investments
• a review of our approach within 24 months of the rules coming into force

Who this applies to 

This new regime will affect authorised persons who approve, or intend to approve, financial promotions for unauthorised persons. It will not affect authorised persons that only approve their own financial promotions for communication by an unauthorised person, the financial promotions of their appointed representatives (ARs) relating to the regulated activities they have accepted responsibility for, or the financial promotions of unauthorised persons within their corporate group. The exemptions are contained in the Financial Services and Markets Act 2000 (Exemptions from Financial Promotion General Requirement) Regulations 2023.

It will also be of interest to:

• consumers and consumer organisations
• persons operating in the cryptoasset market
• applicants and prospective applicants for authorisation which may wish to approve financial promotions for unauthorised persons
• relevant trade bodies
• unauthorised persons that get their financial promotions approved by authorised persons

Next steps 

Firms need to consider whether there is a need for them to apply to be able to approve financial promotions for unauthorised persons.

The initial application period for firms to submit applications for permission to approve financial promotions opened on 6 November 2023. The initial application period will close on 6 February 2024, and on the following day, 7 February 2024, the new legislation will come fully into force, at which point firms that have not applied to the gateway will no longer be able to approve financial promotions (subject to the exemptions described above).

Firms that apply at the gateway during the initial application period will be able to continue approving financial promotions for unauthorised persons while we determine their application.

If firms that do not apply at the gateway during the initial application period want to approve financial promotions in the future, they can apply for permission to approve using a variation of permission form. However, they will not be able to approve financial promotions until we have determined their application as successful.

Applicants for Part 4A permission have also been able to apply for permission to approve financial promotions since 6 November 2023.

To help firms to prepare their applications, we have published a webpage[7] on applying to approve financial promotions for unauthorised persons. The questions that applicants will be asked are listed in Annex 1 and 2 of the policy statement.

Background  

One of the overarching outcomes we expect from financial services is that consumers are sold suitable products and services and receive good treatment.

An important focus for us to achieve this is setting and testing higher standards, to enable consumers to help themselves when interacting with financial services.

Currently, any authorised person can generally approve financial promotions for unauthorised persons. We have seen too many non‑compliant financial promotions being approved by authorised persons and then communicated by unauthorised persons to consumers. As a result, consumers for whom these products and services are inappropriate have been harmed.

With effect from 7 February 2024, amendments to the Financial Services and Markets Act 2000 will impose the new ‘Financial Promotion Requirement’ (in section 55NA of that Act) on all existing and newly authorised persons, restricting them from approving financial promotions unless they have permission to do so (subject to exemptions). In December 2022 we published CP22/27[6], which set out how we proposed to implement this gateway.

The gateway and our accompanying approach to firms that apply are designed to strengthen our oversight of approvals and improve the standard of approved financial promotions.