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Compliance

Consultation on new Financial Promotions framework

HM Treasury publishes consultation paper on the proposed regulatory framework for approval of financial promotions

Posted on 31 Jul 2020

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HM Treasury has published a consultation paper on the newly proposed regulatory framework for the approval of financial promotions. The proposed framework is intended to prevent the approval of potentially unsuitable, misleading, unclear and unfair financial promotions of unauthorised firms.

The government’s view is that current safeguards are not strong enough to ensure that financial promotions are compliant with FCA rules. Financial promotions are currently only required to be approved by an authorised firm and there is no process through which a firm must be assessed as suitable and competent before it can approve financial promotions of unauthorised firms. The government, therefore, proposes to establish a regulatory ‘gateway’ through which firms must pass before being able to approve financial promotions of unauthorised firms and any firm wishing to do so must first obtain the consent of the FCA.

The consultation paper highlights how the existing regime operates, its flaws and further details on reform proposals, including proposed policy options to deliver the gateway. HM Treasury has put forward the following consultation questions:

  1. Do you agree that a gateway should be established enabling the FCA to assess the suitability of a firm before it is permitted to approve the financial promotions of unauthorised persons?
  2. What are the risks and benefits of each of the two policy options put forward? Would there be any unintended consequences resulting from implementation?
  3. If the government was to proceed with one of the two policy options, which would be your preference and why?

The consultation will run from 20 July. To respond to the consultation, please send a response document to finproms@hmtreasury.gov.uk Anyone wishing to respond should do so by 12 pm on 25 October.

How can we help?

At Laven, our consultants are on hand to help identify the actions your firm needs to take to ensure you are compliant and aware of all the risks outlined in this update. Whether this is through assisting with new policies and procedures that need to be put in place or providing online training for staff to make them fully aware of the regulatory burden.

Laven has also built Laven Tech software solution that leverages advanced technology combined with our vast subject matter expertise. Laven Tech is designed to assist fund managers, service providers and investors to meet today’s growing demands.

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