The financial promotion regime—essentials

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • The financial promotion regime—essentials
  • What is the financial promotion regime?
  • Media neutrality
  • Circumstances in which the financial promotion restriction does not apply
  • Territorial scope of the financial promotion restriction and the impact of Brexit
  • Brexit impact on the financial promotion regime
  • Financial promotions: Invitation or inducement
  • Financial promotions: meaning of invitation
  • Financial promotions: meaning of inducement
  • Steps leading to an inducement and examples of inducements
  • More...

The financial promotion regime—essentials

What is the financial promotion regime?

The term ‘financial promotion’ is not used in the Financial Services and Markets Act 2000 (FSMA 2000) other than in the title of section 21. Under FSMA 2000, s 21(1), a person (A) must not, in the course of business, communicate an invitation or inducement (communicate includes causing a communication to be made) to engage in investment activity, subject to the circumstance set out in Circumstances in which the financial promotion restriction does not apply below.

Engaging in investment activity means the entering or offering to enter into an agreement the making or performance of which by either party constitutes a controlled activity; or the exercising of any rights conferred by a controlled investment to acquire a controlled investment.

In addition, as a result of an amendment made by Financial Guidance and Claims Act 2018, the financial promotion restriction has been extended to ‘engaging in claims management activities’. The Financial Guidance and Claims Act 2018 (Commencement No. 4) Regulations 2018, SI 2018/1045 brought the amendment into force on 6 October 2018.

There is detailed guidance on the financial promotion restriction in the Financial Conduct Authority (FCA) Handbook Perimeter Guidance manual (PERG 8). There are 37 sub-chapters and an annex in PERG 8. PERG 8 explores the types of communication firms may make which are subject to the financial promotion

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