From 7th February 2024, the Financial Promotions Gateway regime came into force and applies for FCA regulated firms that need to approve Financial Promotions. Any firms that previously approved financial promotions for unauthorised persons now must also be Section 21 approved or cease approving financial promotions for unauthorised persons until approval is granted.
Why did the change occur?
In the FCA’s initial consultation document, it said that it had seen clear evidence of consumers investing in high-risk products, that are simply not in line with their individual risk tolerance, due to poor quality approved financial promotions.
It claimed that in the worst cases, the performance of investments was drastically different from the claims made in promotions or the product had failed, therefore leading to significant and unexpected losses for retail investors. The data released by FCA on 2022 financial promotions showed substantial increased intervention activity further substantiating this claim and the need for greater compliance.
Under the new rules, firms are required to report back to the FCA on financial promotions they have approved in the last 3, 6 and 12 months, which the regulator said will help to crack down on rogue adverts and promotions.
Sarah Pritchard, Executive Director, Markets said:
“Social media and online advertising means that consumers are taking less time between seeing a promotion and making a financial decision. It is therefore essential that they are equipped with the right information at the right time so that they can make good financial decisions. This is especially important as we face the rising cost of living.”
What Does This Mean for Firms?
Firms which approve financial promotions for unauthorised persons must ensure the approvals process is as compliant and efficient as possible.
ComplyPortal’s Approvals Module offers simple, easy-to-use workflows providing speedy response and a robust audit trail for approvals requested by firms you approve financial promotions for.
The Approvals Module comes with registers designed for functions such as logging and managing Financial Promotions and requests. Bespoke registers can be added, or selections made from our growing library of additional register templates with a full reporting function included within the tool to help you quickly and easily provide solid, audit driven records of all of your financial promotions that have been logged and approved.
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About ComplyPortal:
First developed in 2011 by compliance professionals for compliance officers, ComplyPortal offers workflow, automation, and several modules to help firms with control and regulatory compliance monitoring.
ComplyPortal simplifies financial services regulatory compliance management on an easy-to-use cloud-based comprehensive compliance platform. It enables compliance officers, risk officers and senior management to keep track of their firm’s regulatory responsibilities and workflows. Our platform includes the following modules, among others:
- Monitoring: a year-round schedule pre-populated with monitoring questionnaires to ease compliance processes
- Registers: lists controlled by the Compliance officer, but easy for staff to view
- Risk: map and control risk areas to effectively identify and manage risk for your firm
- Training: access our CMLS platform for all Compliance and Governance Training
