SUP 16.31 Financial promotion approval reporting

1The effect of SUP 16.31.2R is that the rules in this section do not:

1. (1)

   apply in relation to any financial promotions which a firm approves within the scope of an approver permission exemption;

2. (2)

   require a firm to notify, or include within a bi-annual report details of, such financial promotions.

1. (1)

   1The effect of section 55NA of the Act is that2 a firm is unable to approve a financial promotion unless:

   1. (a)

      the firm is a permitted approver in relation to the financial promotion; or

   2. (b)

      an approver permission exemption applies.

2. (2)

   The rules in this section impose requirements on firms with approver permission to provide the FCA with information about their approval of financial promotions (other than in reliance on an approver permission exemption).

3. (3)

   The purpose of these requirements is to enable the FCA to:

   1. (a)

      effectively monitor the compliance of approved financial promotions with its financial promotion rules;

   2. (b)

      identify where firms which have approved financial promotions approve amendments to, or withdraw approvals of, financial promotions for reasons which might give rise to a risk of harm to consumers; and

   3. (c)

      identify any emerging risks to consumers.

4. (4)

   The rules in this section include requirements to:

   1. (a)

      notify the FCA in a timely manner of each:

      1. (i)

         approval of a financial promotion relating to a qualifying cryptoasset or non-mass market investment; or

      2. (ii)

         amendment or withdrawal of a prior approval of any financial promotion by reason of a notifiable concern; and

   2. (b)

      provide a report to the FCA on a 6-monthly basis relating to the firm’s activity of approving financial promotions.

1. (1)

   1A notifiable concern may arise, for example, where a firm that has approved a financial promotion:

   1. (a)

      becomes aware that the financial promotion does not comply, or no longer complies, with applicable financial promotion rules such that it risks causing harm to consumers; or

   2. (b)

      receives information which suggests that the unauthorised person or persons for whom the financial promotion was approved have provided misleading information in connection with that approval.

2. (2)

   In deciding whether to notify the FCA of approval of amendments to, or withdrawal of approval of, a financial promotion, a firm should consider the purpose of the notification rule (SUP 16.31.4G(3)).

1. (1)

   1For the purposes of this section, reference to a firm approving, or withdrawing approval of, a ‘financial promotion’ is to a firm approving, or withdrawing approval of, one or more communications which can together be considered to form part of a single invitation or inducement to engage in investment activity or to engage in claims management activity.

2. (2)

   This means that where a firm approves the content of more than one communication, including across multiple media, in respect of the same investment activity and conveying a consistent message, the FCA would only expect:

   1. (a)

      to receive one notification in respect of those communications for the purposes of SUP 16.31.5R; and

   2. (b)

      the firm to report one approval for the purposes of SUP 16.31.10R.

3. (3)

   An example of the scenario in (2) would be where a firm approves a number of communications relating to the same product or service as part of a single marketing campaign.

4. (4)

   Where a firm has approved one or more communications comprising a single ‘financial promotion’ relating to a particular product or service as described in (2), and is later approached to approve a substantively different communication or communications relating to the same product or service, this should be considered as a new ‘financial promotion’ for the purposes of this section.

5. (5)

   For the purposes of SUP 16.31.5R(2)(a), the FCA considers that amendments to an approved financial promotion are likely to require further approval where those amendments relate to the communication’s substance as an invitation or inducement to engage in investment activity or engage in claims management activity.

6. (6)

   This means that changes to administrative information, such as contact details, within a communication are unlikely to require approval. However, changes to information which may affect a recipient’s assessment of whether to respond to, or act upon, the communication are likely to require further approval.

7. (7)

   Even where a firm is not required to make a notification to the FCA under the rules in this section, the firm should consider whether a particular matter is one of which the FCA would reasonably expect notice (Principle 11), having regard to the purpose of the rules in this section (SUP 16.31.4G(3)). For example, where a firm is approached to approve a financial promotion relating to an investment which risks causing harm to consumers.

8. (8)

   SUP 16.31.10R(4) refers to the number of complaints received relating to a firm’s approval of financial promotions. This figure should include complaints received directly by the firm about financial promotions which it has approved and any complaints about approved financial promotions received by persons for whom it has approved such financial promotions. To this end, a firm should maintain arrangements for those unauthorised persons for whom it approves financial promotions to forward any complaints, or relevant parts of complaints, relating to approved financial promotions to the firm.

1If the FCA’s information technology systems fail and online submission is unavailable for 24 hours or more, the FCA will endeavour to publish a notice on its website confirming that online submission is unavailable and that the alternative methods of submission set out in SUP 16.3.9R (Method of submission of reports) should be used.

1Firms are reminded of the need to maintain adequate records which are sufficient to enable the FCA to monitor compliance with requirements under the regulatory system (SYSC 9). Firms should therefore maintain appropriate records of approvals, withdrawals of approvals and approvals of amendments to financial promotions even where formal notification to the FCA (pursuant to SUP 16.31.5R) is not required. Firms subject to the rules in COBS 4 should also refer to COBS 4.11.