Related provisions for MCOB 3A.1.10
1 - 20 of 133 items.
The exemptions in Part VI apply to different types of financial promotion, and the exemption available may be based on a number of facts. These may be the identity of the maker of the financial promotion, the identity of the recipient of the financial promotion, the subject matter of the financial promotion or the nature of the financial promotion itself. Some of these exemptions apply to non-real time financial promotions, others to solicited real time financial promotions and
Article 28 exempts financial promotions, other than unsolicited real time financial promotions, which are one-off in nature. Whether or not any particular financial promotion is one-off in nature will depend upon the individual circumstances in which it is made. Article 28(3) sets out conditions which, if all are met, are conclusive. Otherwise they are indicative. Even if none are met the exemption may still apply. This makes it clear that the overriding issue is whether the financial
The FCA considers the effect of each of the conditions in PERG 8.14.3G (1) to PERG 8.14.3G (3) to be as follows.(1) The first condition requires the financial promotion to be made, so ruling out any financial promotions which are directed at persons. The effect of article 6(b) and (e) of the Financial Promotion Order is that a communication is made to a person when it is addressed to him and that person to whom the financial promotion is addressed is its recipient. This means
In the FCA's opinion, the indicators referred to in PERG 8.14.4 G suggest that there are two essential elements of a one-off financial promotion. These are that it is tailored to the circumstances of the recipient and that it is individual in nature (in that it is not simply a personalised letter sent out as part of a general mailshot). Apart from this there is no need for the communication to be an isolated instance. For example, the fact that there may be a considerable number
A financial promotion may fail to satisfy all of the indicators referred to in PERG 8.14.4 G because it is addressed to more than one recipient and they are not persons who will engage in investment activity jointly. In the FCA's view, such a financial promotion is capable of being one-off where the persons are to enter into the same transaction and the promotion is tailored to their individual circumstances. This may typically happen during negotiations for the sale of a company
The fact that a financial promotion may be made following an organised marketing campaign does not mean that it must automatically be regarded as part of the campaign or that it cannot be one-off. For example, after a person has responded to a general promotion, an investment manager may make financial promotions to him and tailor them to his individual objectives. Such subsequent financial promotions can be one-off. Similarly, a person who provides corporate finance services
In the FCA's view, a person such as an investment manager or adviser is not conducting an organised marketing campaign purely because he regularly provides a particular client with financial promotions as part of his service. Neither is such a person conducting an organised marketing campaign purely because he may have several clients whose personal circumstances and objectives may suggest that a particular investment opportunity may attract them. If he considers the individual
In the FCA's view, a person will not be making one-off financial promotions simply by sending out a series of letters to a number of customers or potential customers where a few details are changed (such as the name and address) but the bulk of the letter is standard. Such letters would be likely to be part of an organised marketing campaign.
Article 28A exempts one-off unsolicited real time financial promotions provided that the person making the financial promotion believes on reasonable grounds:1(1) that the recipient understands the risks associated with engaging in the investment activity to which the financial promotion relates; and(2) (at the time the communication is made) that the recipient would expect to be contacted by him about the investment activity to which the financial promotion relates.
In the FCA's view, the article 28A exemption should provide scope for persons such as professional advisers to make unsolicited real time financial promotions in various situations. For example, when approaching persons with whom their clients are proposing to do business or those persons’ professional advisers. The exemption will not apply where the financial promotions are part of an organised marketing campaign (see PERG 8.14.4G (3)). So, in cases where a professional adviser
Whether or not it would be reasonable to believe that any person understands the risks associated with the investment activity covered in a financial promotion or would expect to be contacted about it must be judged on the particular circumstances. In the FCA's opinion, the exemption requires that the recipient has the required understanding of risk at the time the promotion is made to him. However, it would be reasonable to believe that a person understands the risk involved
There are a number of exemptions in the Financial Promotion Order relating to financial promotions sent into the United Kingdom by an overseas communicator who does not carry on certain controlled activities in the United Kingdom. These exemptions apply in addition to any other exemptions which may apply to any particular financial promotion by an overseas communicator.
Article 30 exempts any solicited real time financial promotion made by an overseas communicator in the course of or for the purposes of certain controlled activities which he carries on outside the United Kingdom. This enables an overseas communicator, for example, to respond to an unprompted telephone enquiry made by a person in the United Kingdom or an enquiry which follows a financial promotion made by the overseas communicator and which was approved by an authorised perso
In order to make an unsolicited real time financial promotion, an overseas communicator must rely on either article 32 or article 33. Article 32 provides an exemption for unsolicited real time financial promotions made by an overseas communicator to persons who were previously overseas and were a customer of his then. This is subject to certain conditions, including that, in broad terms, the customer would reasonably expect to be contacted about the subject matter of the financial
Article 31 exempts non-real time financial promotions made to previously overseas customers and subject to certain conditions. Again, to satisfy this exemption, the communicator must be based overseas and must be communicating with a person who was previously a customer of his while that person was overseas.
11A local authority (in the United Kingdom or elsewhere) is exempt from the financial promotion restriction (that is, the restriction in section 21 of the Act) for a communication which is a non-real time financial promotion or a solicited real time financial promotion. However, this exemption does not apply to a communication which relates to a regulated credit agreement, where entering into the agreement or exercising, or having the right to exercise, the lender’s rights and
This exemption allows a person in another EEA State who lawfully carries on a controlled activity in that State to promote into the United Kingdom. The terms of the exemption are that the promotion must comply with the rules inCOBS 45,9MCOB 3A10 or CONC 39 (as relevant). Care should be taken as any failure to satisfy any of the relevant requirements of these rules may mean that this exemption is not satisfied and that the financial promotion may breach section 21 if it has not
Article 39 of the Financial Promotion Order exempts a financial promotion that:(1) is communicated by one participator or potential participator in a joint enterprise to another; and(2) is in connection with or for the purposes of that enterprise.A joint enterprise means, in general terms, arrangements entered into by two or more persons for commercial purposes related to a business that they carry on. The business must not involve a controlled activity. The term ‘participant’
This exemption disapplies the restriction in section 21 of the Act from non-real time financial promotions or solicited real time financial promotions which are made to a person who the communicator believes on reasonable grounds to be a certified high net worth individual and which relate to certain investments. These investments must be either:7(1) shares in or debentures or alternative debentures7 of an unlisted company; or(2) warrants,certificates representing certain securities,
A certified high net worth individual is an individual who has signed a statement in the form prescribed in Part I (Statement for certified high net worth individuals) of Schedule 5 to the Financial Promotion Order. This requires the individual to certify that he has earned at least £100,000 or have held net assets to the value of more than £250,000 throughout the financial year before the date of the certificate. Where the financial promotion is an outgoing electronic commerce
In addition, the financial promotion must be accompanied by:(1) a warning in the terms prescribed in article 48(5) and which satisfies certain conditions regarding its form as set out in article 48(6) – this warning must either be given in legible form at the time the communication is made or given orally at that time and a copy in legible form sent to the recipient within two business days; and(2) certain indications as set out in article 48(7).
A person seeking to make a financial promotion to another person may wish to make enquiries of that person to establish whether he is certified. Unless another exemption applies or the financial promotion is approved by an authorised person, such enquiries will not be possible if the enquiry communication is an inducement or invitation to engage in investment activity. In the FCA's8 view, a communication which is merely an enquiry seeking to establish that a person holds a current
This exemption works on a different basis to that for high net worth individuals. There is no requirement for a certificate or statement to be signed. Instead, the person making the promotion must believe on reasonable grounds that the recipients are high net worth companies, unincorporated associations or trusts or be reasonably regarded as directing the financial promotion only at such persons. A high net worth company, unincorporated association or trust is a person who satisfies
Article 49(4) gives the list of conditions which, if all are met, is proof that the financial promotion is directed at relevant persons. It is not necessary for all or any of the conditions to be met for a financial promotion to be regarded as directed at relevant persons. Ultimately the matter will be one of fact to be determined by taking account of the circumstances in which the financial promotion is made. In the FCA's opinion, it is not necessary for a financial promotion,
To be a sophisticated investor for the purposes of article 50, the recipient of a financial promotion must have a current certificate from an authorised person stating that he has enough knowledge to be able to understand the risks associated with the description of investment to which the financial promotion relates. Where the financial promotion is an outgoing electronic commerce communication3, the certificate may be signed by a person who is entitled, under the law of an EEA
The exemption also requires that certain warnings are given to the potential investor. In this respect, article 50(3)(d) provides that the financial promotion must state that there is a significant risk of losing all monies invested or of incurring additional liability. In the FCA's view, these are alternative statements and whichever is the relevant statement should be included. If there is no risk of incurring additional liability the statement may simply say that there is a
The second exemption in article 50A disapplies the restriction in section 21 of the Act from any financial promotions4 which are made to a person who the communicator believes on reasonable grounds to be a self-certified sophisticated investor and which relate to one or more of the specified investments in PERG 8.14.21G (1) to (3) (Certified high net worth individuals (article 484)).44
For the exemption to apply, the certificate must have been signed within twelve months of the date on which the communication is made. The validity of the statement is not affected by a defect in its wording or form provided the defect does not alter its meaning or involve failure to place certain paragraphs in bold.
In addition, the financial promotion must be accompanied by:(1) a warning in the terms prescribed in article 50A(5) and which satisfies certain conditions regarding its form as set out in article 50A(6) – this warning must either be given in legible form at the time the communication is made or given orally at that time and a copy in legible form sent to the recipient within two business days; and(2) certain indications as set out in article 50A(7).
1(1) This exemption allows a non-real time or solicited real time financial promotion to be made to an association with a particular membership. Membership of this association must be reasonably believed to be wholly or predominantly made up of1 certified high net worth individuals, high net worth companies or unincorporated associations or trusts, or certified or self-certified1 sophisticated investors. The financial promotion must not relate to an investment under the terms
Article 52 concerns non-real time and solicited real time financial promotions about offers of shares or debentures or alternative debentures7 of a company. The offers must be made only to or be reasonably regarded as only directed at certain persons. These persons must belong to an identified group of persons who, when the financial promotion is made, might reasonably be regarded as having an existing and common interest with each other and the company.
The exemption is subject to certain conditions. In broad terms, these are that the financial promotion must be accompanied by an indication:(1) that the directors or promoters of the company have taken all reasonable care to ensure that the financial promotion is true and not misleading;(2) that the directors or promoters have not limited their liability;(3) that any person who is in doubt about the investment should consult an authorised person; and(4) that:(a) the directors
11The financial promotion restriction (that is, the restriction in section 21 of the Act) does not apply to a communication which is a non-real time financial promotion or a solicited real time financial promotion by an insolvency practitioner who acts in that capacity (see the definition of “acting as an insolvency practitioner” in article 3 of the Regulated Activities Order). The exemption only applies where the communication is made in the course of carrying on an activity
The exemption in article 62 of the Financial Promotion Order applies to any financial promotioncommunicated by or on behalf of a body corporate, a partnership, an individual or a group of connected individuals. The financial promotion must relate to a transaction which is one to acquire or dispose of shares in a body corporate and either:(1) it is the case that:(a) the shares, in addition, where appropriate, to any shares already held by the buyer, amount to 50% or more of the
In the FCA's view, a main aim of the exemption (see PERG 8.14.35G (1)) is to remove from the scope of section 21 a financial promotion concerning the sale of a corporate business by a person who, either alone or with others, controls the business to another person who, either alone or with others, proposes to control the business.
In the FCA's17 opinion, provided that the purpose of the transaction is for the buyer to acquire the necessary control, it is irrelevant who is the seller. The exemption specifically applies to financial promotions which are communicated on behalf of the parties or potential parties to the transaction.1717
1Article 72 exempts any financial promotion made by an employer to an employee in relation to a group personal pension scheme or a stakeholder pension scheme. This is subject to certain requirements as follows:(1) the financial promotion must inform the employee that the employer will make a contribution to the pension that the employee will receive from the pension scheme to which the financial promotion relates in the event of the employee becoming a member;(2) the employer
6Article 72A exempts any financial promotion made to an employee by or on behalf of a person (“A”) in relation to a group personal pension scheme or a stakeholder pension scheme. This is subject to certain requirements as follows:(1) the employer and A must have entered into a written contract specifying the terms on which the communication may be made;(2) in the case of a communication made by a person (“B”) on behalf of A, A and B must also have entered into a written contract
6Article 72B exempts any financial promotion made by an employer to an employee in relation to work-related insurance. This is subject to certain requirements as follows:(1) where the provider of the insurance is not the employer, the employer must not receive or have received, any direct financial benefit (including any commission, discount, remuneration or reduction in premium) as a result of making the communication; and(2) where the communication is a non-real time financial
6Article 72C exempts any financial promotion made to an employee by or on behalf of a person (“A”) in relation to work-related insurance. This is subject to certain requirements as follows:(1) the employer and A must have entered into a written contract specifying the terms on which the communication may be made;(2) in the case of a communication made by a person (“B”) on behalf of A, A and B must also have entered into a written contract specifying the terms on which the communication
6Article 72D exempts any financial promotion made by an employer to an employee in relation to a staff mortgage. This is subject to certain requirements as follows:(1) where the provider of the staff mortgage is an undertaking in the same group as the employer, the employer must not receive or have received, any direct financial benefit (including any commission, discount, remuneration or reduction in premium) as a result of making the communication; and(2) where the communication
6Article 72E exempts any financial promotion made to an employee by or on behalf of a person (“A”) in relation to a staff mortgage. This is subject to certain requirements as follows:(1) the employer and A must have entered into a written contract specifying the terms on which the communication may be made;(2) in the case of a communication made by a person (“B”) on behalf of A, A and B must also have entered into a written contract specifying the terms on which the communication
9Article 72F exempts any financial promotion which is made to an employee by or on behalf of a person in relation to an exempt staff loan. An exempt staff loan is defined as a credit agreement which is:(1) offered by a lender to a borrower as an incident of employment with the lender, or with an undertaking in the same group as the lender11; and(2) an exempt agreement under a provision of article 60G (exempt agreements: exemptions relating to the total charge for credit) of the
1Article 73 exempts any financial promotion made by a person in the course of carrying out his duties as an adviser for, or employee of, an advice centre. This is provided the financial promotion relates to:(1) a home finance transaction; or2(2) rights under, or rights to or interests in rights under, a life policy; or(3) a child trust fund within the meaning of section 1(2) of the Child Trust Funds Act 2004.
The exemptions for bearer instruments (articles 41 and 42 of the Financial Promotion Order) relate to financial promotions made to or directed at persons entitled to bearer instruments. For clarity, the FCA takes the view that persons who hold bearer instruments through a clearing system such as Euroclear or Clearstream are persons entitled to those instruments for the purposes of articles 41 and 42.
The exemption applies whether or not the financial promotion is made from the United Kingdom. However, there is the exception that, if it is an unsolicited real time financial promotion, it must be made from a place outside the United Kingdom and be for the purposes of a business carried on entirely outside the United Kingdom. To give effect to the principle of country of origin regulation of information society services as required by the E-Commerce Directive, article 12(7) of
Articles 12(3) and (4) of the Financial Promotion Order (subject to article 12(5) – see PERG 8.12.8 G) have the effect that, where a financial promotion is directed from a place outside the United Kingdom, it will be conclusive proof that it is not directed at persons in the United Kingdom even if it is received by a person in the United Kingdom, if:(1) the financial promotion is not referred to in or directly accessible from another communication (for example, an advertisement
There is no definition in the Financial Promotion Order of what ‘proper systems and procedures’ are, and the matter will ultimately be for the courts to determine. This is unsurprising as systems and procedures may take many different forms depending upon the precise circumstances in which financial promotions are made. But it is clear that persons seeking conclusive proof that the exemption applies must consciously make arrangements to prevent their dealing with certain recipients
Where a financial promotion is directed from within the United Kingdom, articles 12(3) and (4) also state (subject to article 12(5) – see PERG 8.12.8 G) that there can be conclusive proof that the financial promotion is directed only at persons outside the United Kingdom. This will be the case if, in addition to the conditions referred to in PERG 8.12.5G (1) and PERG 8.12.5G (2), the financial promotion is accompanied by an indication that:(1) it is directed only at persons outside
In any case, some but not all of the conditions referred to in PERG 8.12.5G (1) to PERG 8.12.5G (2) and PERG 8.12.7G (1) to PERG 8.12.7G (2) (or the additional condition that the communication is included in a website, newspaper or periodical publication which is principally accessed in or intended for a non-UK market or in a radio or television broadcast or teletext service transmitted principally for reception overseas) may be met. In these cases, those conditions being satisfied
Financial promotions made by a prospective customer to a person who supplies a controlled investment or services comprising controlled activities with a view to his acquiring the investment, or receiving the services or receiving information about those investments or services, are exempted. This exemption will only be of relevance to corporate customers or others who are acting in the course of business. Other types of customers will not be subject to section 21 to begin wit
Financial promotions other than unsolicited real time financial promotions are exempt where they follow up an earlier financial promotion which, in compliance with another exemption (such as that for promotions made to high net worth individuals or sophisticated investors – see PERG 8.14.21 G and PERG 8.14.27 G), contains certain indications or information. This is provided the financial promotion:(1) is made by the person who made or directed the earlier financial promotion;(2)
This exemption applies to any financial promotion that is made with a view to or for the purposes of introducing the recipient to certain kinds of person. These are authorised persons who carry on the controlled activity to which the financial promotion relates, or exempt persons where the financial promotion relates to a controlled activity that is also a regulated activity in relation to which he is an exempt person. This is subject to the requirement that:11(1) the person making
6This exemption does not apply to any financial promotion that is made with a view to, or for the purpose of, an introduction to a person who carries on the controlled activities of:(1) credit broking;(2) operating an electronic system in relation to lending; or(3) agreeing to carry on the above activities.
This exemption covers three6distinct situations. Article 16(1) applies to all exempt persons where they make financial promotions for the purpose of their exempt activities. These persons would include appointed representatives (except appointed representatives to whom the exemption in article 16(1A) applies; see PERG 8.12.12A G),6recognised investment exchanges, recognised clearing houses, recognised auction platforms5 and those who are able to take advantage of the Exemption
6Article 16(1A) applies to non-real time financial promotions and solicited real time financial promotions made:(1) by an appointed representative who is carrying on an activity to which sections 20(1) and (1A) and 23(1A) of the Act do not apply as a result of section 39(1D) of the Act; and(2) for the purposes of the appointed representative's business of carrying on a controlled activity which is also a regulated activity to which sections 20(1) and (1A) and 23(1A) of the Act
Article 16 (2) applies to unsolicited real time financial promotions made by an appointed representative in carrying on the business:(1) for which his principal has accepted responsibility for the purposes of section 39 of the Act (Exemption of appointed representatives); and(2) in relation to which the appointed representative is exempt under section 39.In addition, the financial promotion may only be made in the circumstances in which it could be made by the appointed representative'sprincipal
Under this exemption, the financial promotion itself must not relate to a controlled investment provided by a person who is identified in it, nor must it identify any person as someone who carries on any controlled activity. So, it will apply where there is a financial promotion of a class of products. For example ‘ISAs are great’ or ‘buy into an investment trust and help the economy’. Such financial promotions may be made by a person such as a trade association which is not itself
The exemption can also be used in certain circumstances where an intermediary is advertising its services as an intermediary. This is because advising on and arranging deposits and contracts of insurance other than life policies are not controlled activities. This means that an unauthorised intermediary offering to find the best rates on deposits may identify himself in the financial promotion as he will not be carrying on a controlled activity. This is provided that the financial
Other persons may be able to take advantage of the exemption. For example, a person making a generic financial promotion may identify himself, whether he may carry on a controlled activity or not. This is provided that the financial promotion does not (directly or indirectly) identify him as someone who carries on a controlled activity.
Journalists may be able to take advantage of this exemption when writing about investments generally. But the exemption would not apply if the financial promotion recommends the purchase or sale of particular investments such as XYZ Plc shares. This is because it will be identifying XYZ Plc as a person who provides the controlled investment (being its shares) and as a person who carries on the controlled activity of dealing in securities and contractually based investments (by
The purpose of these 1exemptions1 is to ensure that, subject to certain conditions, the restriction in section 21 of the Act does not apply to those who merely transport the financial promotions of other persons. Obvious examples here are postal and Internet service providers, courier companies and telecommunications companies. PERG 8.6.5 G explains that such persons may not be regarded as communicating a financial promotion simply because they have distributed it. Article 18
The conditions in article 18(2) include a requirement that the person making the financial promotion does not select, modify or otherwise exercise control over its content before it is transmitted or received. Article 18(3) provides that a person is not selecting, modifying or exercising control merely as a result of having power to remove material which is illegal, defamatory or in breach of copyright or at the request of a regulatory body or where the law requires him to do
The conditions in article 18 also require that the person acting as the mere conduit must communicate in the course of an activity1 carried on by him the principal purpose of which is transmitting or receiving material provided to him by others. In the FCA's view, what matters is that the person is carrying on an activity1 which has the required principal purpose. Such an activity1 might represent but a part of a person’s overall business1 activities (however small), so long as
Financial promotions made only to or directed only at certain types of person who are sophisticated enough to understand the risks involved are exempt. These are:(1) authorised persons;(2) exempt persons (where the financial promotion relates to a controlled activity which is a regulated activity for which the person is exempt);(3) governments and local authorities; and(4) persons whose ordinary business involves carrying on a controlled activity of the kind to which the financial
Article 19(4) sets out conditions which, if all are satisfied, offer conclusive proof that a financial promotion is directed only at investment professionals. These conditions relate to indications accompanying the financial promotion and the existence of proper systems and procedures. The guidance about proper systems and procedures in PERG 8.12.6 G applies equally to article 19. Article 19(6) specifically states that a financial promotion may be treated as made only to or directed
The broad scope of the restriction in section 21 of the Act will inevitably mean that it will, from time to time, apply to journalists and others who make their living from commenting on news including financial affairs (such as broadcasters). This is liable to happen when such persons offer share tips or recommend the use of a particular firm for investment purposes. Such tips or recommendations are likely to amount to inducements to engage in investment activity.
The Treasury, in making the Financial Promotion Order, noted that financial journalism has an important part to play in increasing consumer awareness of financial services and products. It further observed the need to strike the right balance between protecting consumers and ensuring that the level of regulation is as light as possible, while respecting the principle of the freedom of the press.
With this objective in mind, the exemption in article 20 applies to any non-real time financial promotion the contents of which are devised by a person acting as a journalist where the financial promotion is in:1(1) a newspaper, journal, magazine or other periodical publication;(2) a regularly updated news or information service (such as a website or teletext service); or(3) a television or radio broadcast or transmission.In addition, the publication, service or broadcast must
Provided the conditions in PERG 8.12.25 G are met, the exemption in article 20 applies to any non-real time financial promotion. However, there is an additional condition where the subject matter of the financial promotion is shares or options, futures or contracts for differences relating to shares and the financial promotion identifies directly a person who issues or provides such an investment. In such cases, the exemption is subject to a disclosure requirement which is itself
The exceptions to the disclosure requirement are where the financial promotion is in either:(1) a publication, service or broadcast which has proper systems and procedures which prevent the publication of communications without disclosure of financial interests; or(2) a publication, service or broadcast which falls within the remit of:(a) the Code of Practice issued by the Press Complaints Commission; or(b) the OFCOM Broadcasting1 Code; or11(c) the Producers’ Guidelines issued
The effect of PERG 8.12.27G (2) is that financial promotions made by journalists in publications, services or broadcasts to which one of the codes or the guidelines apply are not subject to the disclosure requirement. This is so even if a financial promotion is made in breach of the codes or guidelines. Such financial promotions would remain to be dealt with by the body responsible for the code or guidelines and the publisher concerned. The code or guidelines may, of course, themselves
The effect of PERG 8.12.27G (1) is that a journalist will not breach section 21 by not disclosing a financial interest, providing that the publication, service or broadcast concerned operates proper systems and procedures. As with the exemption in article 12 of the Financial Promotion Order (see PERG 8.12.6 G), what proper systems and procedures are will be a matter ultimately for the courts to determine and may vary according to the medium used. It will depend upon all the circumstances
It appears to the FCA, however, that there will be situations when it may not be practical for the persons who are responsible for a publication, service or broadcast to apply proper systems and procedures to every person who may, whilst acting in the capacity of a journalist, communicate a financial promotion. For example where persons are asked to stand in at the last moment. In such cases, it is the FCA's opinion that the benefit of the exclusion will not be lost as respects
Article 20A provides a further exemption for certain financial promotionscommunicated by means of a service or broadcast which satisfies the principal purpose test in article 54 of the Regulated Activity Order (see PERG 8.12.25 G and PERG 7). Readers of this section should also refer to the guidance on company statements in PERG 8.21.1
The main purpose of the exemption appears to be to guard against the possibility that, during the course of a broadcast interview or a live website presentation, a financial promotion is made inadvertently by a director or employee of a company or other business undertaking when he is not acting in the capacity of a journalist (see PERG 8.12.25 G). The exemption applies if the financial promotion relates only to:(1) shares of the undertaking or of another undertaking in the same
The exemption applies where the financial promotion:(1) comprises words which are spoken by the director or employee and not broadcast, transmitted or displayed in writing; or(2) is displayed in writing only because it is part of an interactive dialogue to which the director or employee is a party and in the course of which he is expected to respond immediately to questions put by a recipient of the communication.This is provided that the financial promotion is not part of an
The first part of the exemption (referred to in PERG 8.12.34G (1)) specifically precludes any form of written communication. However, the FCA understands that the Treasury did not intend to prohibit the use of written words in the form of subtitling. These may be an aid to those with hearing difficulties or to interpret a foreign language, or the use of captions which supplement a spoken communication by highlighting aspects of it without introducing anything new. The FCA cannot
The second part of the exemption (referred to in PERG 8.12.34G (2)) envisages that the director or employee will be holding the equivalent of a conversation conducted in writing. Typically this will involve the exchange of e-mails. It is possible that this part of the exemption could be used by companies making so-called webcasts over the Internet. However, this would only be the case if the service through which the webcast is provided is a regularly updated news or information
There is a general concern that the practice of companies issuing statements and giving briefings may involve a financial promotion. These arise sometimes as a result of requirements imposed by a listing authority or an exchange or market, PERG 8.4.14 G offers guidance on when such statements or briefings may amount to or involve an inducement to engage in investment activity. It indicates that whilst statements of fact alone will not be inducements, there may be circumstances
It is common practice for listed companies to brief analysts, usually at the time of the company's preliminary, interim and, if applicable, quarterly results and after the information has been issued to the market as a whole. Briefings may be made personally to a small or large number of analysts in a meeting or through a conference call. It is increasingly becoming the practice for listed companies to make their briefings available live to journalists and the general public on
PERG 8.21.4 G to PERG 8.21.21 G set out the FCA's views on the potential relevance of certain exemptions to company statements and briefings. The exemptions are referred to in the same order as the Financial Promotion Order. In the FCA's view, these exemptions (whether alone or, where applicable, in combination) should enable most statements and briefings which involve financial promotions to be made by the company concerned without the need for approval. In particular, the FCA
Any statement or briefing which did not identify the company as an issuer of securities (for example, by referring to its securities) and which does not identify any other particular investment or provider of investments or investment services will be exempt as a generic promotion (see PERG 8.12.14 G). In practice, it will be unlikely that such a statement or briefing would involve a financial promotion but the article 17 exemption may be useful where any doubt arises.
Where statements or briefings are only available to analysts who are, or who work for, authorised persons (including overseas persons who would need to be authorised if they were conducting their business in the United Kingdom), article 19 will exempt any financial promotion that may be made (see PERG 8.12.21 G). Furthermore, where a financial promotion is made in the course of an interactive dialogue with an analyst and is addressed to him, the financial promotion will be regarded
PERG 8.12.32 G contains detailed guidance on the exemption in article 20A. The exemption is capable of applying to financial promotions in a company statement or briefing where they are communicated through a webcast if the website is a regularly updated news or information service. For this to be the case, the website must be a service provided to persons who use it (so it must not, for example, simply be an advertising vehicle) and that service must be one of providing news
Article 28 applies to one-off non-real time and solicited real time financial promotions. Article 28A applies to one-off unsolicited real time financial promotions. It is possible that articles 28 or 28A could apply to financial promotions in company statements or briefings if they were to be made other than to an analyst or journalist. In this respect, the comments made in PERG 8.14.3 G about one-off financial promotions are relevant.
Article 43 applies to non-real time and solicited real time financial promotions made by, or on behalf of,1 a company ('C') to persons who, in broad terms, are:(1) members or creditors of C or a group member of C ('G');(2) entitled to a relevant investment issued by C or G;(3) entitled to become a member of C or G;(4) entitled to have transferred to them title to a relevant investment issued by C or G.The financial promotion must relate only to relevant investments issued or to
A 'relevant investment' in article 43 means:(1) shares or debentures or alternative debentures;3 and(2) warrants and certificates representing certain securities relating to (1) and issued by G or a person acting on behalf of or under arrangements made with C.Article 43 allows a company to communicate a financial promotion to its shareholders about rights issues or a cash offer by a third party for their shares. It also allows a company to communicate with its creditors about
Article 47 will exempt financial promotions in company statements or briefings where they are made to members of the press and may be combined with article 19 (Investment professionals). This means that companies will only need to look for other exemptions where the recipients of their financial promotions are persons other than analysts or journalists or both.
Article 59 is capable of applying to financial promotions in company statements and briefings where they are accompanied by:(1) the whole or any part of the annual accounts of the company (provided it is not an open-ended investment company); or(2) any report prepared and approved by the directors of such a company under sections 414A and 414D of the Companies Act 2006 (strategic reports) or sections 415 and 419 of that Act (directors’ reports), or4 corresponding legislation4
Article 59 imposes certain conditions.(1) The financial promotion must be an inducement and not be an invitation or amount to advice to acquire or dispose of an investment.(2) The inducement must not relate to any investment other than shares or debentures or alternative debentures3 issued, or to be issued, by1 the company making the financial promotion (or a member of its group) or warrants relating to or certificates representing such shares or debentures or alternative debentures.3(3)
Article 67 exempts any financial promotion other than an unsolicited real time financial promotion which relates to shares, debentures, alternative debentures3, government and public securities, warrants or certificates representing certain securities which are permitted to be traded or dealt in on a relevant market. A relevant market for the purposes of article 67 is one which meets the criteria in Part I of, or is specified in or established under the rules of an exchange specified
The reference to financial promotions which are permitted to be communicated relates, in the FCA's opinion, to something which is expressly permitted rather than simply not expressly prohibited. Article 67 itself does not specify any particular medium for communicating required or permitted material. So, it will be enough for the financial promotion to be part of a document which is itself required or permitted to be communicated (such as reports or financial statements). Market
Article 67 refers to an investment which is permitted to be traded or dealt in on a relevant market. In the FCA's opinion, this includes a situation where a class of securities is traded on a relevant market but the financial promotion relates to new securities of that class which have not yet themselves been issued or started trading. Where securities of that class have not yet been admitted to trading on a relevant market, article 68 may apply – see PERG 8.21.16 G.
Article 68 applies where the financial promotion relates to securities which have not yet been admitted to trading but for which application has been or is to be made. It exempts a non-real time or a solicited real-time financial promotion which a relevant EEA market requires to be communicated before admission to trading can be granted. A relevant EEA market for this purpose is a market with its head office in an EEA State and which meets the conditions in Part I of5 Schedule
Article 69 is somewhat1 similar to article 59 in the conditions it imposes (see PERG 8.21.12 G). There1 are two main differences between article 69 and article 59.1(1) Article 69 does not apply to unsolicited real time financial promotions.(2) The requirement in article 59 that the financial promotion be accompanied by accounts or a report is replaced in article 69. It is replaced by a requirement that shares or debentures or alternative debentures3 of the company or another body
In the FCA's opinion, companies whose securities are permitted to be traded or dealt in on a relevant market should be able to make good use of the article 69 exemption. But such companies will need to ensure that they meet the specific requirements in article 69(3). In very general terms, a financial promotion will comply with these requirements if:1(1) the only reason it is a financial promotion is that it contains or is accompanied by1 an inducement about certain investments
Article 702 applies to a non-real time financial promotion included in:2(1) listing particulars1; or21(2) supplementary listing particulars1; or21(3) a prospectus or supplementary prospectus approved in line with Prospectus Rules or by the competent authority of another EEA State (provided the requirements of section 87H of the Act are met) – including part of such a prospectus or supplementary prospectus2; or2112(4) any other document required or permitted to be published by
A requirement common to the exemptions in articles 59, 67 and 69 is that the financial promotions must not relate to investments other than those issued, or to be issued,1 by the company or a member of its group. The FCA is aware that there is concern about comments made in company statements or briefings. This is that they may be held to be inducements to acquire or dispose of, or exercise rights conferred by, an investment issued by a third party. For example, traded options
This section applies:(1) to a financial promotion in relation to consumer credit lending;(2) to a financial promotion in relation to credit broking in relation to regulated credit agreements;(3) to a financial promotion in relation to activities specified in article 36A(1)(a) or (c) of the Regulated Activities Order in relation to what would be regulated credit agreements but for a relevant provision, but only where the firm also carries on such activities in relation to regulated
A financial promotion must not be communicated where it indicates a firm is willing to provide credit under a regulated restricted-use credit agreement relating to goods or services to be supplied by any person, when at the time the financial promotion is communicated, the firm or any supplier under such an agreement does not hold itself out as prepared to sell the goodsor provide the services (as the case may be) for cash. [Note: section 45 of CCA]
(1) Where a financial promotion indicates3 a rate of interest or an amount relating to the cost of credit whether expressed as a sum of money or a proportion of a specified amount, the financial promotion must also: (a) include a representative example in accordance with CONC 3.5.5 R, and (b) specify a postal address at which the person making the financial promotion may be contacted.[Note: regulation 4(1) of CCAR 2010](2) Paragraph (1)(a) does not apply where the financial promotion:
(1) The representative example in CONC 3.5.3R (1) must comprise the following items of information: (a) the rate of interest, and whether it is fixed or variable or both, expressed as a fixed or variable percentage applied on an annual basis to the amount of credit drawn down;(b) the nature and amount of any other charge included in the total charge for credit;(c) the total amount of credit;(d) the representative APR;(e) in the case of credit in the form of a deferred payment
(1) The representative example in CONC 3.5.5 R should not be limited to being representative of agreements featured in the financial promotion if the firmcommunicating or approving the financial promotion expects other agreements to be entered into as a result of the financial promotion, whether with the firm or with a third party. [Note: paragraph 6.8 of BIS Guidance on regulations implementing the Consumer Credit Directive](1A) Firms are referred to the Glossary definition of
(1) A financial promotion must include the representative APR if it: (a) states or implies that credit is available to individuals who might otherwise consider their access to credit restricted; or323(b) includes a favourable comparison relating to the credit, whether express or implied, with another person, product or service; or3(c) includes an incentive 3to apply for credit or to enter into an agreement under which credit is provided.[Note: regulation 6 of CCAR 2010]3(2) The
(1) A firm’s trading name, website address or logo could trigger the requirements in CONC 3.5.7R(1).3(2) For the purposes of CONC 3.5.7R(1)(b), a comparison with another person, product or service includes a reference (whether stated or implied) to:3(a) the terms on which, or the way in which, credit is offered or made available; or3(b) the nature or quality or any other aspect of the service relating to the credit that the person offers or provides (or does not offer or provide).3The
(1) A financial promotion must include a clear, concise and prominent3 statement in respect of any obligation to enter into a contract for an ancillary service where:(a) the conclusion of that contract is compulsory in order to obtain the credit or to obtain it on the terms and conditions promoted; and (b) the cost of that ancillary service cannot be determined in advance.[Note: regulation 8 of CCAR 2010](2) The statement in (1) must be presented together with any representative
(1) A financial promotion must not include: (a) the word “overdraft” or any similar expression as describing any agreement for running-account credit, except where an agreement enables a customer to overdraw on a current account;(b) the expression “interest free” or any similar expression indicating that a customer is liable to pay no greater amount in respect of a transaction financed by credit than he would be liable to pay as a cash purchaser for the like transaction, except
(1) Where a financial promotion is about running-account credit and the credit limit applicable is not yet known on the date the financial promotion is made, but it is known that it will be less than £1,200, the credit limit must be assumed to be an amount equal to that maximum limit. [Note: paragraph 1 of schedule to CCAR 2010](2) The assumption in (1) applies in place of the assumption in CONC App 1.2.5 R for the purpose of calculating the total charge for credit.Total charge
As a result of this chapter and CONC 3:(1) a financial promotion is not subject to CONC 3to the extent that it relates to qualifying credit; and(2) where a firm makes a communication which consists of a financial promotion of qualifying credit and a financial promotion of a different form of lending that is not qualifying credit (for example, an unsecured personal loan), the content of the latter will need to comply with CONC 3.
(1) Except for MCOB 3A.5, MCOB 3A does not apply to an authorised professional firm in relation to the communication of a financial promotion if the following conditions are satisfied:(a) the firm's main business must be the practice of its profession; (b) the financial promotion must be made for the purposes of, and incidental to, the promotion or provision by the firm of:(i) its professional services; or(ii) its non-mainstream regulated activities (see PROF 5.2 (Nature of non-mainstream
This chapter applies to the communication or approval of a financial promotion of qualifying credit as follows:
Application and purpose |
|
The fair, clear and not misleading rules |
MCOB 3A.2, except MCOB 3A.2.5 R |
Other general requirements for financial promotions |
|
Qualifying credit financial promotions |
|
MCD financial promotions (note 1) |
|
Systems and controls |
|
Note 1: This item does not apply to non-MCDfinancial promotions of qualifying credit. |
|
This chapter applies to the communication or approval of a financial promotion of a home reversion plan as follows:
Application and purpose |
|
The fair, clear and not misleading rules |
MCOB 3A.2, except MCOB 3A.2.5 R |
Other general requirements for financial promotions |
|
Home reversion plan financial promotions |
|
Systems and controls |
This chapter applies to the communication or approval of a financial promotion of a regulated sale and rent back agreement as follows:
Application and purpose |
|
The fair, clear and not misleading rules |
MCOB 3A.2, except MCOB 3A.2.5 R |
Other general requirements for financial promotions |
|
Sale and rent back financial promotions |
|
Systems and controls |
This chapter applies to the communication or approval of a financial promotion of a home purchase plan as follows:
Application and purpose |
|
Fair, clear and not misleading rule for approval of home purchase plan financial promotions |
|
Home purchase plan financial promotions |
Except for MCOB 3A.2.4R (2) and MCOB 3A.5, this chapter does not apply to a firm in relation to a financial promotion of qualifying credit that is of a kind listed in MCOB 3A.1.9 R, except if the firm approves the financial promotion, then the following apply:(1) MCOB 3A.1 (Application and purpose);(2) MCOB 3A.2.4 R (Fair, clear and not misleading financial promotions);(3) MCOB 3A.4.4 G to MCOB 3A.4.7 G (Approval of qualifying credit promotions; No approval of real time qualifying
This table belongs to MCOB 3A.1.8 R.
Exemptions |
||
This chapter does not apply to the following: |
||
(1) |
a financial promotion which contains only one or more of the following |
|
(a) |
the name of the firm (or its appointed representative); |
|
(b) |
a logo; |
|
(c) |
a contact point (address (including an email address), telephone or facsimile number); |
|
(d) |
a brief, factual statement of the firm's (or its appointed representative's) main occupation; |
|
(2) |
a financial promotion which can lawfully be communicated by an unauthorised person without approval; |
|
(3) |
a financial promotion communicated from outside the United Kingdom which would be exempt under articles 30, 31, 32 or 33 of the Financial Promotion Order (Overseas communicators) if the office from which the financial promotion is communicated were a separate unauthorised person (but see GEN 4.4.1 R (Business for private customers from non-UK offices)). |
|
This chapter applies to a firm in relation to:(1) the communication of a financial promotion to a person in the United Kingdom;(2) the communication of a cold call of qualifying credit, a home reversion plan or a regulated sale and rent back agreement, unless it is made from a place, and for the purposes of a business which is only carried on, outside the United Kingdom;(3) the approval of a non-real time financial promotion of qualifying credit, a home reversion plan or a regulated
The application under MCOB 3A.1.13 R is relevant both when a firmcommunicates a financial promotion itself and when a firmapproves a non-real time financial promotion for communication by others. However, see also MCOB 3A.1.15 R (Exceptions to territorial scope: rules without territorial limitation for approval of financial promotions).
Subject to MCOB 3A.1.16 R, the following parts of this chapter apply without any territorial limitation if a firmapproves a financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement:(1) MCOB 3A.1 (Application and purpose);(2) rules requiring a financial promotion to be fair, clear and not misleading (see MCOB 3A.2.4 R); and (3) provisions regarding the approval of financial promotions (except those relating to approval of financial
(1) Notwithstanding MCOB 3A.1.13 R and MCOB 3A.1.15 R, where a firm which satisfies the conditions in (2) communicates a financial promotion of qualifying credit, the rules in (3) do not apply.(2) The conditions are that:(a) the firmcommunicates the financial promotion of qualifying credit from an establishment maintained by the firm in an EEA State other than the United Kingdom, and not from an establishment maintained by the firm in the United Kingdom or outside the EEA;(b)
The rules in SYSC 3 (and also for Solvency II firms, the PRA Rulebook: Solvency II firms: Conditions Governing Business)1 and SYSC 4 require a firm that communicates with a client in relation to designated investment business, or communicates or approves a financial promotion, to put in place systems and controls or policies and procedures, or an effective internal control system,1 in order to comply with the rules in this chapter.
(1) Before a firmapproves a financial promotion for communication by an unauthorised person, it must confirm that the financial promotion complies with the financial promotion rules.(2) If, at any time after a firm has complied with (1), a firm becomes aware that a financial promotion no longer complies with the financial promotion rules, it must withdraw its approval and notify any person that it knows to be relying on its approval as soon as reasonably practicable.(3) When approving
(1) Section 21(1) of the Act (Restrictions on financial promotion) prohibits an unauthorised person from communicating a financial promotion, in the course of business, unless an exemption applies or the financial promotion is approved by a firm. Many of the rules in this chapter apply when a firmapproves a financial promotion in the same way as when a firmcommunicates a financial promotion itself.(2) A firm may also wish to approve a financial promotion that it communicates itself.
If a firmapproves a financial promotion in circumstances in which one or more of the financial promotion rules, or the prohibition on approval of promotions for collective investment schemes in section 240(1) of the Act (Restriction on approval), are expressly disapplied, the approval must be given on terms that it is limited to those circumstances.
If an approval is limited, and an unauthorised personcommunicates the financial promotion to persons not covered by the approval, the unauthorised person may commit an offence under the restriction on financial promotion in the Act (section 21). A firm giving a limited approval may wish to notify the unauthorised person accordingly.
(1) A firm (A) will not contravene any of the financial promotion rules if it communicates a financial promotion which has been produced by another person and:(a) A takes reasonable care to establish that another firm (B) has confirmed that the financial promotion complies with the financial promotion rules;(b) A takes reasonable care to establish that it communicates the financial promotion only to recipients of the type for whom it was intended at the time B carried out the
The Act does not contain any definition of the expressions ‘invitation’ or ‘inducement’, leaving them to their natural meaning. The ordinary dictionary entries for ‘invitation’ and ‘inducement’ offer several possible meanings to the expressions. An ‘invitation’ is capable of meanings ranging from merely asking graciously or making a request to encouraging or soliciting. The expression ‘inducement’ is given meanings ranging from merely bringing about to prevailing upon or persuading.
The Treasury, responding to consultation on the draft Financial Promotion Order, stated its intention that only communications containing a degree of incitement would amount to ‘inducements’ and that communications of purely factual information would not. This is provided the facts are presented in such a way that they do not also amount to an invitation or inducement. This was made clear both in the Treasury’s consultation document on financial promotion and during the passage
The FCA recognises that the matter cannot be without doubt. However, it is the FCA view that the context in which the expressions ‘invitation’ or ‘inducement’ are used clearly suggests that the purpose of section 21 is to regulate communications which have a promotional element. This is because they are used as restrictions on the making of financial promotions which are intended to have a similar effect to restrictions on advertising and unsolicited personal communications in
Such advertisements are almost invariably intended to create awareness, hopefully generating future business. So they may or may not be inducements. This depends on the extent to which their contents seek to persuade or incite persons to contact the advertiser for details of its services or to do business with it. Merely stating past achievements with no contact details will not be enough to make such an advertisement an inducement. Providing contact details may give the advertisement
Journalism can take many forms. But typically a journalist may write an editorial piece on a listed company or about the investments or investment services that a particular firm provides. This may often be in response to a press release. The editorial may or may not contain details of or, on a website, a link to the site of the company or firm concerned. Such editorial may specifically recommend that readers should consider buying or sellinginvestments (whether or not particular
These will be advertisements that contain encouragement to contact the advertiser. They are likely to be inducements to do business with him or to get more information from him. If so, they will be inducements to engage in investment activity if they seek to persuade or incite persons to buy or sell investments or to get investment services. See PERG 8.4.7 G for more guidance on preliminary communications and whether they are a significant step in the chain of events which are
(1) Introductions may take many forms but typically involve an offer to make an introduction or action taken in response to an unsolicited request. An introduction may be an inducement if the introducer is actively seeking to persuade or incite the person he is introducing to do business with the person to whom the introduction is made. So it may fall under section 21 if its purpose is to lead to investment activity. For example, if a person answers the question ‘do you or can
A person may be distributing financial promotions which have been issued or approved by an authorised person. This may be by displaying copies or delivering them or handing them out whether or not on request. PERG 8.6 explains when such a person will be communicating the financial promotions. Where this is so, the exemption for mere conduits in article 18 of the Financial Promotion Order may apply (see PERG 8.12.18 G). But article 18 will not apply if the distributor creates his
Trading methods and techniques, such as traded options training courses and software-based or manual trading tools will, in many cases, be too remote from any eventual investment dealing activities to be inducements to engage in investment activity. Promotions of such things will be inducements (or invitations) to receive training and general trading tips and techniques. However, such things may be sold on the basis that they are almost certain to produce profits from the trading
These are clearly invitations or inducements. Whether they will involve invitations or inducements to engage in investment activity rather than to attend the meeting or receive the call or visit, will depend upon their purpose and content. PERG 8.4.7 G discusses communications which are a significant step in the chain of events leading to an agreement to engage in investment activity. The purpose of the meeting, call or visit to which the invitation or inducement relates may be
An explanation of the terms of an agreement or of the consequences of taking a particular course of action can be merely factual information unless it includes or is accompanied by encouragement to enter into the agreement or take the course of action. The mere fact that the explanation may present the investment in a good light or otherwise influence the recipient will not make it an inducement. Where such communications are financial promotions they may fall under one of the
A person ('A') may enquire:(1) whether another person is certified as a high net worth individual or a sophisticated investor so that A may determine whether an exemption applies; or(2) whether a person has received material sent to him; or(3) how a person might propose to react to a take-over offer. Enquiries of this or a similar kind will not amount to inducements to engage in investment activity unless they involve persuasion or incitement to do so. The enquiry may be accompanied
Solicited or accompanying material which does not contain any invitation or inducement to engage in investment activity will not itself be a financial promotion. This is provided that the material is not part of any financial promotion which may accompany it. This is explained in greater detail in PERG 8.4.29 G to PERG 8.4.30 G.
Persons may sometimes be asked to send material which has not been prepared for use as a financial promotion to a person who is interested in making an investment. For example, a prospective participant in a Lloyd’s syndicate may ask for a copy of the business plan or forecast prepared by the managing agent to comply with Lloyd’s requirements. As another example, a prospective purchaser of, or investor in, a company may wish to see a valuation report, a due diligence report or
The person who responds to the request for the material in the circumstances in PERG 8.4.29 G may make a financial promotion in the form of a covering letter or oral communication ('C'). This will not mean that the material accompanying C must itself be treated as an inducement. This will depend on the circumstances. The material itself would only become an inducement if it is turned into part of the financial promotion in C. For example, C may refer to the contents or part of
A personal illustration (for instance, of the costs of and benefits under a particular investment product) may or may not be an invitation or inducement. This will depend on the extent to which it seeks to persuade or incite the recipient to invest as opposed to merely providing him with information. A personal illustration may, however, be accompanied by an invitation or inducement to buy the investment in which case the exemptions for one-off financial promotions in articles
Employers and their contracted service providers 6may communicate with employees on matters which involve controlled investments. For example, work-related insurance, staff mortgages,6personal pension schemes (including stakeholder schemes) and other employee benefit schemes other than occupational pension schemes. Interests under the trusts of an occupational pension scheme are not a controlled investment (see paragraph 27 (2) of Schedule 1 to the Financial Promotion Order).In
The word ‘communicate’ is extended under section 21(13) of the Act and includes causing a communication to be made. This means that a person who causes the communication of a financial promotion by another person is also subject to the restriction in section 21. Article 6(d) of the Financial Promotion Order also states that the word ‘communicate’ has the same meaning when used in exemptions in the Order. Article 6(a) also states that the word ‘communication’ has the same meaning
Apart from the originators of a financial promotion, the FCA considers the following persons to be communicating it or causing it to be communicated:(1) publishers and broadcasters who carry advertisements (including websites carrying banner advertisements); and(2) intermediaries who redistribute another person’s communication probably with their own communications.
In the FCA's view, the following persons will not be causing or communicating:(1) advertising agencies and others when they are designing advertising material for originators;(2) persons who print or produce material for others to use as advertisements;(3) professional advisers when they are preparing material for clients or advising them on the need to communicate or the merits or consequences of their communicating a financial promotion; and(4) persons who are responsible for
The FCA considers that, to communicate, a person must take some active step to make the communication. This will be a question of fact in each case. But a person who knowingly leaves copies of a document where it is reasonable to presume that persons will pick up copies and may seek to act on them will be communicating them.
The Financial Promotion Order contains an exemption for mere conduits in article 18. It does not follow that all persons who provide services for facilitating the distribution of financial promotions are communicating. Where persons of this kind would normally be unaware of the fact that they may be distributing financial promotions or are indifferent as to whether they are doing so, or both, they will not be regarded as communicating them. This may, for example, include:(1) postal
A general point arises about causing and communicating on whether a particular exemption that applies to a communication made by a specified person also applies to a person who is causing that communication to be made. For example, article 551 of the Financial Promotion Order (Communications by members of professions)1 applies only to a communication by an exempt professional firm.1 This exemption may apply where a person ('P') requests an exempt professional firm ('E') to1communicate
1The position of an unauthorised person (‘U’) who, in the course of business, causes an authorised person to communicate a financial promotion is somewhat different. This is because the authorised person (‘A’) is not subject to section 21 of the Act and so will not necessarily be communicating the financial promotion in circumstances in which an exemption would apply. To avoid any doubt about the application of section 21 to U, a specific exemption is provided in article 17A of
Another general point arises about the scope of exemptions that apply only to financial promotions by a particular person. This is whether the exemption applies to the communication of a financial promotion by an unauthorised person on behalf of the person to whom the exemption applies. In the FCA's view, this will not be the case unless the exemption specifically states that it applies to a communication made on behalf of the person identified in the exemption. For example, article
Section 21(1) of the Act refers only to the communication of an invitation or inducement. It says nothing about communications being 'made to' or 'directed at' persons or about who the 'recipient' of a communication will be. These facts are determined by the following sequence:(1) section 21(13) of the Act indicates that communications are 'made';(2) article 6 of the Financial Promotion Order (Interpretation: communications) indicates that communications are made by being 'addressed
In the FCA's opinion, the matters in PERG 8.6.9 G have the following effects.(1) Any one particular communication will either be real time or non-real time but not both. This is because:(a) a real time communication is one made in the course of an interactive dialogue (see PERG 8.10.2 G for guidance on the meaning of real time);(b) those exemptions which concern real time communications apply only to communications which are made to persons and not those which are directed at
2CONC 3.7.5 R to CONC 3.7.8 G:(1) apply to a financial promotion or a communication with a customer in relation to credit broking whether or not it is in relation to a regulated credit agreement; but(2) do not apply to a financial promotion or a communication with a customer which clearly indicates that it is made solely in respect of credit broking in relation to a credit agreement secured by a legal or equitable mortgage on land.
A firm must, in a financial promotion or a document which is intended for individuals which relates to its credit broking, indicate the extent of its powers and in particular whether it works exclusively with one or more lenders or works independently. [Note: section 160A(3) of CCA][Note: article 21(a) of the Consumer Credit Directive]
A firm should in a financial promotion or in a communication with a customer:(1) make clear, to the extent an average customer of the firm would understand, the nature of the service that the firm provides; [Note: paragraphs 3.7e and 4.8b of CBG](2) indicate to the customer in a prominent way the existence of any financial arrangements with a lender that might impact upon the firm's impartiality in promoting a credit1 product to a customer;[Note: paragraphs 2.2, 6th bullet and
2CONC 3.7.5 R requires all financial promotions and communications with customers to specify the legal name of the firm: the rule does not prohibit the use of trading names, but does require the legal name to be given in addition to any trading name used. If the firm is a company registered under the Companies Act 2006, the firm's legal name will be the name by which it is registered.
(1) 2A firm which is a credit broker and not a lender must ensure that any financial promotion states prominently that the firm is a credit broker and that it is not a lender.(2) A firm which is both a credit broker and a lender must ensure that any financial promotion that solely promotes its services as a credit broker states prominently that the financial promotion is promoting the firm's services as a credit broker and not its services as a lender.
This chapter, unless a rule in CONC 3 specifies differently, applies to:(1) a communication with a customer in relation to a credit agreement;(2) the communication or approval for communication of a financial promotion in relation to a credit agreement;(3) a communication with a customer in relation to credit broking;(4) the communication or approval for communication of a financial promotion in relation to credit broking;(5) a communication with a borrower or a prospective borrower
The clear fair and not misleading rule in CONC 3.3.1 R and the general requirements rule in CONC 3.3.2 R and the guidance inCONC 3.3.5 G to CONC 3.3.11 G also, unless a rule or guidance in those paragraphs specifies differently, apply to:(1) a communication with a customer in relation to debt counselling or debt adjusting; and(2) the communication or approval for communication of a financial promotion in relation to debt counselling or debt adjusting.
CONC 3.3.1 R also applies to:(1) a communication with a customer in relation to a consumer hire agreement; (2) the communication or approval for communication of a financial promotion in relation to a consumer hire agreement; and(3) a communication with a customer in relation to providing credit information services.
CONC 3 does not apply to:(1) a financial promotion or a communication which expressly or by implication indicates clearly that it is solely promoting credit agreements or consumer hire agreements or P2P agreements for the purposes in each case of a customer's business;(2) a financial promotion or a communication to the extent that it relates to qualifying credit; or(3) an excluded communication.
(1) CONC 3 does not apply (apart from the provisions in (2)) to a financial promotion or communication that consists of only one or more of the following:(a) the name or a trading name 3of the firm (or its appointed representative);(b) a logo;(c) a contact point (address (including e-mail address), telephone, facsimile number and website address);(d) a brief, factual description of the type of product or service provided by the firm.(2) The provisions in CONC 3 which apply to
This chapter applies to a firm in relation to:(1) a communication with, or the communication or approval for communication of a financial promotion to, a person in the UK;(2) the communication of an unsolicited real time financial promotion, unless it is made from a place, and for the purposes of a business which is only carried on, outside the UK; and(3) the communication or approval for communication of a financial promotion that is an electronic commerce communication to a
This section applies:(1) to a financial promotion in relation to consumer credit lending in relation to regulated credit agreements secured on land; and(2) to a financial promotion in relation to credit broking in relation to regulated credit agreements secured on land; and in both cases other than financial promotions to the extent that they relate to qualifying credit.
In this section, for a financial promotion relating to credit to be provided under a credit agreement “relevant date” means:(1) in a case where a date is specified in or determinable under the agreement at the date of its making as that on which the customer is entitled to require provision of anything the subject of the agreement, the earliest such date; and(2) in any other case, the date of the making of the agreement.
A financial promotion must not be communicated where it indicates a firm is willing to provide credit under a regulated restricted-use credit agreement secured on land relating to goods or services to be supplied by any person, when at the time the financial promotion is communicated, the firm or any supplier under such an agreement does not hold itself out as prepared to sell the goods or provide the services (as the case may be) for cash.[Note: section 45 of CCA]
(1) Where a financial promotion includes any of the amounts referred to in (5) to (7) of CONC 3.6.10 R the promotion must: (a) include all the other items of information (other than any item inapplicable to the particular case) listed in CONC 3.6.10 R; and(b) specify a postal address at which the person making the promotion may be contacted, except in the case of a financial promotion:(i) communicated by means of television or radio broadcast;(ii) in any form on the premises of
(1) Where a financial promotion concerns a facility for which security is or may be required, the promotion must:(a) state that security is or may be required; and(b) specify the nature of the security.[Note: regulation 7(1) of CCAR 2004](2) Where, in the case of a financial promotion, the security comprises or may comprise a mortgage or charge on a property used by the customer as a dwelling (whether or not the customer’s primary residence)4:(a) except where (c) applies, the
(1) A financial promotion must specify the typical APR if the promotion:(a) specifies any other rate of charge;(b) includes any of the items of information listed in CONC 3.6.10R (5) to (7);(c) indicates in any way, whether expressly or by implication,3 including by means of the name given to a business or of an address used by a business for the purposes of electronic communication, that:(i) credit is available to persons who might otherwise consider their access to credit restricted;
(1) A financial promotion must not include:(a) the word “overdraft” or any similar expression as describing any agreement for running-account credit, except where the agreement enables a customer to overdraw on a current account; (b) the expression “interest free” or any similar expression indicating that a customer is liable to pay no greater amount in respect of a transaction financed by credit than he would be liable to pay as a cash purchaser for the like transaction, except
(1) In the case of a financial promotion about running-account credit, the following assumptions have effect for the purpose of calculating the total charge for credit and any APR, notwithstanding the terms of the transaction advertised and in place of any assumptions in CONC App 1.1.11 R to CONC App 1.1.18 R that might otherwise apply:(a) the amount of the credit to be provided must be taken to be £1,500 or, in a case where credit is to be provided subject to a credit limit
(1) The amount of credit which may be provided under a credit agreement or an indication of one or both of the maximum amount and the minimum amount of credit which may be provided. [Note: paragraph 1 of schedule 2 to CCAR 2004]Deposit of money in an account(2) A statement of any requirement to place on deposit any sum of money in any account with any person. [Note: paragraph 2 of schedule 2 to CCAR 2004]Cash price(3) In the case of a financial promotion about credit to be provided
Although the restriction in section 21 addresses all forms of financial promotion, it is necessary to distinguish between particular types of financial promotion as these are treated differently under the Financial Promotion Order. This regime recognises two types of financial promotion. These are real time and non-real time financial promotions. Real time financial promotions are then divided into solicited or unsolicited real time financial promotions.
The terms real time financial promotion and non-real time financial promotion are defined in article 7 of the Financial Promotion Order (Interpretation: real time communications). Article 7(1) defines a real time financial promotion as a financial promotion made in the course of a personal visit, telephone conversation or other interactive dialogue. A non-real time financial promotion is one that is not a real time financial promotion. Article 7(5) states that financial promotions
In the FCA's view, the fact that scope for interaction is essential if a financial promotion is to be real time leads to the following conclusions.(1) Most communications made in written or pictorial form will not offer scope for interaction. The most likely exception to this is where persons are expected to respond immediately. This situation may arise, for example, where the equivalent of a telephone conversation is conducted by e-mail. This is the basis of the exemption in
Article 8(3) of the Financial Promotion Order also has the effect in broad terms that financial promotions made during a visit, call or dialogue will be solicited only if they relate to controlled activities or controlled investments of the kind to which the recipient envisaged that they would relate. In determining whether this is the case, account must be taken of all the circumstances when the call, visit or dialogue was requested or initiated. For example, a person may ask
PERG 8.6.9 G explains that article 6 of the Financial Promotion Order has the broad effect that a communication is made to another person where it is addressed to a particular person or persons. It also states that a ‘recipient’ of a communication is the person or persons to who it is made (that is to whom it is addressed). This takes on importance where certain exemptions which apply to real time financial promotions made to a person are concerned. It appears to the FCA that,
There will be occasions when financial promotions are received by persons other than those in PERG 8.10.11G (1) or PERG 8.10.11G (2) who will not have solicited them. For example, a more distant relative or friend ('F') who acts as a support to the person who is to engage in investment activity ('P') or P’s professional adviser ('A'). As explained in PERG 8.6.10 G, in such cases the financial promotion will not be made to F or A unless it is also addressed to them. And it will
In the FCA's view, the mere fact of a person accepting an invitation to attend a meeting does not automatically mean that he has initiated any dialogue which may take place during the meeting and which may amount to a financial promotion. This will depend on the facts of each case and such matters as the manner in which the invitations are made, the arrangements for acceptance and how the meeting is conducted. For example, the fact that investments or investment services will
1This chapter applies to a firm:(1) communicating with a client in relation to its designated investment business (other than MiFID, equivalent third country or optional exemption business)10;(1A) 10communicating with a client in relation to its MiFID, equivalent third country or optional exemption business;(2) communicating or approving a financial promotion other than:(a) a financial promotion of qualifying credit, a home purchase plan or a home reversion plan; or(b) a financial
(1) 4This chapter applies in relation to an authorised professional firm in accordance with COBS 18 (Specialist regimes).(2) This chapter applies, to a limited extent, in relation to communicating or approving a financial promotion that relates to a deposit if the deposit is a structured deposit, cash deposit ISA or cash deposit CTF.
A firm is required to comply with the financial promotion rules in relation to a financial promotioncommunicated by its appointed representative even where the financial promotion does not require approval because of the exemption in article 16 of the Financial Promotion Order (Exempt persons).[Note: see section 39 of the Act]
(1) In COBS 4.3.1 R,9 the defined term9 "financial promotion" includes9, in relation to MiFID or equivalent third country business, MiFID, equivalent third country or optional exemption business9, all communications that are marketing communications within the meaning of MiFID.(2) In the case of MiFID, equivalent third country or optional exemption business9, certain requirements in this chapter are subject to an exemption for the communication of a third party prospectus in certain
Approving a financial promotion without communicating it (which includes causing it to be communicated)3 is not MiFID, equivalent third country or optional exemption business9. Communicating a financial promotion to a person, such as a corporate finance contact or a venture capital contact, who is not a client within the meaning of COBS 3.2.1 R (1), COBS 3.2.1 R (2) or COBS 3.2.1 R (4) in respect of the MiFID, equivalent third country or optional exemption business9 to which
(1) In relation to communications by a firm to a client in relation to its designated investment business this chapter applies in accordance with the general application rule and the rule on business with UKclients from an overseas establishment (COBS 1 Annex 1 Part 2 paragraph 2.1R).(2) In addition, the financial promotion rules apply to a firm in relation to:(a) the communication of a financial promotion to a person inside the United Kingdom;(b) the communication of a cold call
(1) The EEA territorial scope rule modifies the general territorial scope of the rules in this chapter to the extent necessary to be compatible with European law. This means that in a number of cases, the rules in this chapter will apply to communications made by UK firms to persons located outside the United Kingdom and will not apply to communications made to persons inside the United Kingdom by EEA firms. Further guidance on this is located in COBS 1 Annex 1.(2) One effect
In MCOB 3A.4.1R (4)(a) an unsocial hour usually means on a Sunday or before 9am or after 9pm on any other day. It could also mean other days of the week or other times if the firm knows that a particular customer would not wish to be called on that day or at that time for reasons of, for example, religious faith or night shift working.
The requirements of MCOB 3A.4.1 R and MCOB 3A.4.2 G do not prevent, for example, a telephone call centre which has received a call from a customer at an hour generally regarded as unsocial, either responding to that call or asking during the call if the customer would like details of other qualifying credit.
Most of the rules in this chapter apply when a firmapproves a financial promotion of qualifying credit in the same way as when a firmcommunicates a financial promotion of qualifying credit itself. Therefore, a firm has a similar responsibility for a financial promotion of qualifying credit that it approves, as for one that it communicates.
If an approval is limited under MCOB 3A.4.6 R, and an unauthorised personcommunicates the financial promotion to persons not covered by the approval, the unauthorised person may commit an offence under section 21(1) of the Act (Restrictions on financial promotion). A firm giving a limited approval may wish to advise the unauthorised person accordingly.
A firm must not communicate or approve a financial promotion which relates to qualifying credit provided by an overseas person, unless:(1) the financial promotion of qualifying credit makes clear which firm has approved or communicated it and, where relevant, explains:(a) that the rules made under the Act for the protection of customers do not apply;(b) the extent and level to which the compensation scheme will be available or, if the scheme will not be available, a statement
Article 55 of the Financial Promotion Order contains a specific exemption for professional firms allowing them to make solicited or unsolicited real time financial promotions. This is provided the financial promotion is made:(1) by a person who carries on a regulated activity without needing authorisation under the Part XX exemption; and(2) to someone who has already (that is, before the financial promotion is made) engaged the person making the financial promotion to provide
The article 55 exemption also requires that:(1) the financial promotion relates to an activity to which the Part XX exemption applies or which would be a regulated activity but for the exclusion in article 67 of the Regulated Activities Order (Activities carried on in the course of a profession or non-investment business) which concerns activities which are a necessary part of professional services; and(2) the activity to which the financial promotion relates would be undertaken
The FCA considers that, to satisfy the condition in PERG 8.15.2G (2) that an activity be incidental to the provision of professional services, regulated activities cannot be a major part of the practice of the professional firm. The FCA also considers that the following further factors are relevant.(1) The scale of regulated activity in proportion to other professional services provided.(2) Whether and to what extent services that are regulated activities are held out as separate
One of the effects of the requirements in PERG 8.15.2 G concerns financial promotions which relate to an activity which is not a regulated activity as the result of an exclusion in the Regulated Activities Order. In this case, a professional firm using the Part XX exemption cannot make a real time financial promotion relying on article 55 of the Financial Promotion Order unless the exclusion is provided by article 67 of the Regulated Activities Order. Neither can a professional
Article 55A of the Financial Promotion Order exempts non-real time financial promotions where the financial promotion:1(1) is made by a person who carries on a regulated activity without needing authorisation under the Part XX exemption (referred to in PERG 8.15.6 G and PERG 8.15.7 G as ‘Part XX activities’); and(2) contains a specified statement and is limited in its content to the matters referred to in PERG 8.15.6 G.
A financial promotion made under article 55A must contain a statement in the following terms: “The [firm/company] is not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment and consumer credit-related2 services to clients because we are members of [relevant designated professional body]. We can provide these investment and consumer credit-related2 services if they are an incidental part
The article 55A exemption should enable professional firms to issue brochures, websites and other non-real time financial promotions without any need for approval by an authorised person. This is provided the financial promotion does not also contain an invitation or inducement relating to regulated activities other than those covered by the Part XX exemption. In this respect, it should be noted that, unlike article 55, the article 55A exemption does not extend to activities which
The ordinary business of a publisher or broadcaster can involve him in publishing or broadcasting financial promotions (for example, advertisements) on behalf of authorised or exempt persons. Journalists who write about investments or financial services may promote the services of an authorised or exempt person. In the FCA's opinion, such persons would not normally be regarded as making arrangements under article 25(2). This is the case even if any arrangements they may have made
The Regulated Activities Order contains an exclusion (article 27: Enabling parties to communicate) to bring a degree of certainty to this area. This applies to arrangements which might otherwise fall within article 25(2) merely because they provide the means by which one party to a transaction (or potential transaction) is able to communicate with other parties. In the FCA's view, the crucial element of the exclusion is the inclusion of the word ‘merely’. So that, where a publisher,
For example, in the FCA's view a publisher or broadcaster would be likely to be making arrangements within the meaning of article 25(2) and be unable to make use of the exclusion in article 27 if:(1) he enters into an agreement with a provider of investment services such as a broker or product provider for the purpose of carrying their financial promotion; and(2) as part of the arrangements, the publisher or broadcaster does one or more of the following:(a) brands the investment
It would also be an indicator that a publisher or broadcaster might be making arrangements falling within article 25(2) if he receives a commission or other form of reward based on the amount of regulated business done as a result of his carrying the promotion. This would be on the basis that the existence of the financial interest will inevitably have a bearing on the purpose for which the arrangements are viewed as having been made by him. However, the article 27 exclusion will
The mere provision by a website operator of a bulletin board or chat room ought not to amount to making arrangements under article 25(2) unless making such arrangements is the specific purpose of the facility. However, operators of websites with such facilities will clearly need to be aware of potential implications (such as the service being used by unauthorised persons to give advice or make financial promotions or to make misleading statements with a view to manipulating market
1The effect of giving no less prominence to the possible disadvantages than to the benefits associated with a feature will depend on the context of the promotion. The costs, restrictions or conditions relating to a feature, such as any option available, should be detailed for the following non-exhaustive examples:(1) where any part of the discount on the market value of the property is to be repaid to the consumer after a qualifying period; and(2) where a consumer is to benefit
A firm must not in any financial promotion of a regulated sale and rent back agreement exploit the vulnerable nature or circumstances of any customer who may be in financial difficulties and at risk of losing his or her home. As such, the firm must avoid using phrases or terms such as "fast sales", "rescue" or "cash quickly" or any other similar expression.
In addition to the general application rule for this sourcebook, this section applies to the communication, or approval for communication, to a person in the United Kingdom of a financial promotion of a non-investment insurance contract unless it can lawfully be communicated by an unauthorised communicator without approval.
(1) Before a firmapproves a financial promotion it must take reasonable steps to ensure that the financial promotion is clear, fair and not misleading.(2) If, subsequently, a firm becomes aware that a financial promotion is not clear, fair and not misleading, it must withdraw its approval and notify any person that it knows to be relying on its approval as soon as reasonably practicable.
(1) This guidance applies in relation to a financial promotion that makes pricing claims, including financial promotions that indicate or imply that a firm can reduce the premium, provide the cheapest premium or reduce a customer's costs.(2) Such a financial promotion should:(a) be consistent with the result reasonably expected to be achieved by the majority of customers who respond, unless the proportion of those customers who are likely to achieve the pricing claims is stated
COBS does not apply to an authorised professional firm with respect to its non-mainstream regulated activities, except that:(1) the fair, clear and not misleading rule applies;(2) the financial promotion rules apply as modified below;(3) COBS 7 (Insurance mediation) applies but only if the designated professional body of the firm does not have rules approved by the FCA under section 332(5) of the Act that implement articles 12 and 13 of the Insurance Mediation Directive and that
The financial promotion rules do not apply to an authorised professional firm in relation to the communication of a financial promotion if:(1) the firm's main business is the practice of its profession (see IPRU(INV) 2.1.2R(3));(2) the financial promotion is made for the purposes of and incidental to the promotion or provision by the firm of its professional services or its non-mainstream regulated activities; and(3) the financial promotion is not communicated on behalf of another
Section 21(2) of the Act sets out two circumstances in which a financial promotion will not be caught by the restriction in section 21(1). These are where the communicator is an authorised person or where the content of the financial promotion has been approved for the purposes of section 21 by an authorised person. Where approval is concerned it must be specifically for the purposes of enabling the financial promotion to be communicated by unauthorised persons free of the restriction
Where an authorised person makes a financial promotion, he is not subject to the restriction in section 21. So, the communication of the financial promotion by the authorised person will not be a criminal offence under the provisions of section 25 of the Act (Contravention of section 21) and any resulting contract will not be unenforceable under section 30 of the Act (Enforceability of agreement resulting from unlawful communications). However, the appropriate financial promotion
An unauthorised person may wish to pass on a financial promotion made to him by an authorised person. In this case, the fact that the financial promotion was made to him by an authorised person will not be enough for the restriction in section 21 not to apply to him. The authorised person must also both have approved its content and have done so for the purpose of section 21 of the Act. If an authorised person wishes to ensure that an unauthorised person can communicate a financial
With approval generally, issues may arise as to what would be subject to the restrictions in section 21 where an invitation or inducement to engage in investment activity is made through a publication, broadcast or website or is accompanied by other material. In any such instances, it is necessary to consider the circumstances in which the financial promotion is made. For example, where a financial promotion takes the form of an advertisement or advice in a newspaper, broadcast