On 7 March 2024, Statutory Instrument 2024 No.301 – the Financial Services and Markets Act 2000 (Amendment and Transitional Provision) Order 2024 – (the SI) was published.

Background

The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (FPO) contains exemptions from the restriction on communicating financial promotions, including exemptions that enable financial promotions for unlisted companies to be made to high-net-worth individuals and self-certified sophisticated investors. In light of the changing context in which the exemptions operate, the Government reviewed the exemptions and brought forward an instrument to amend them – the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) (No. 2) Order 2023 (the 2023 Order).

The 2023 Order amended the high net worth individual (article 48) and self-certified sophisticated investor (article 50A) exemptions in the FPO. It also applied these changes to the promotion of collective investment schemes, by amending the similar relevant exemptions set out in the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order (PCIS).

In response to new concerns raised about the unintended impact of the changes to the eligibility criteria for the exemptions that were made by the 2023 Order, the SI contains further amendments to these exemptions in the FPO and PCIS.

Changes made by the SI

The changes made by the SI include:

  • Reducing the financial thresholds to be eligible for the high-net-worth individual exemption to income of at least £100,000 in the last financial year or net assets of at least £250,000 in the last financial year.
  • Amending the criteria to be eligible for the self-certified sophisticated investor exemption by:
    • Reinstating the criterion of having made two or more investments in an unlisted company in the previous two years.
    • Reducing the company turnover required to satisfy the ‘company director’ criterion to £1 million (i.e. individuals who have been directors of companies with at least £1 million turnover in the last two years will remain eligible for the self-certified sophisticated investor exemption.
  • Providing that investor statements that comply with the 2023 Order remain valid until and including 30 January 2025. After 30 January 2025, investor statements that comply with the 2023 Order will have no effect for any purpose.

More detail can be found in the Explanatory Memorandum, published alongside the SI. 

The SI comes into force on 27 March 2024.