As previously blogged, the FCA introduced temporary intervention measures on the marketing of speculative illiquid securities that will apply from 1 January 2020 to 31 December 2020.
On 26 November 2019, the FCA published a related webpage setting out guidance under its existing rules on approving financial promotions of unauthorised persons. These existing requirements are set out in Chapter 4 of the Conduct of Business sourcebook (COBS 4).
The FCA explains that before a firm approves a financial promotion of unauthorised persons, it should consider whether this is something it should tell the FCA in accordance with Principle 11 (relations with regulators) of the Principles for Businesses. The webpage sets out further factors for firms to consider including:
- ensuring that a promotion is fair, clear and not misleading;
- ensuring that a promotion complies with the financial promotion rules;
- firms should form their own view as to whether a promotion complies with the financial promotion rules and not accept at face value information provided by unauthorised persons;
- firms approving financial promotions through social media and other forms of digital communications to promote their products are reminded of the FCA’s finalised guidance (FG15/4); and
- a firm’s systems and controls should ensure that it does not approve financial promotions which it lacks the competence to properly review and consider.
The FCA reminds firms that its guidance on approving financial promotions is not exhaustive and is not a complete description of the steps a firm should take when approving a financial promotion relating to a retail investment. It is the responsibility of the firm to determine the extent of the analysis or review needed to confirm that a financial promotion complies with the FCA’s rules on a case-by-case basis.
Where the FCA identifies a financial promotion that has been approved by a firm but does not meet its requirements, the FCA explains that it will consider a range of options including asking the firm that approved the promotion to ensure that it is changed or withdrawn or open an enforcement investigation which could lead to a financial penalty.