Associate Director, Azariah Nukajam discusses the forthcoming deadline which will see a new regulatory gateway through which authorised firms must pass before they can approve the financial promotions of unauthorised firms.
With the impending deadline of 6 February 2024, firms engaged in approving financial promotions for unauthorised firms are urged to take action promptly or risk facing disruption to their existing practices. The Financial Conduct Authority (FCA) will commence the implementation of the Financial Promotions Gateway regime on 7 February 2024, marking a decisive shift in regulatory requirements.
To continue their operations seamlessly, firms must undergo the process of becoming a Section 21 approver by submitting a Variation of Permission (VoP) via the FCA’s Connect portal. This application, accompanied by a comprehensive financial promotions form, is key in demonstrating the firm’s readiness to undertake the added responsibility. The process is set out in the FCA’s recent Policy Statement (PS23/13). It should be noted that only those firms that successfully pass the FCA’s assessment will be granted permission to approve financial promotions for unauthorised firms.
The financial promotions form, which is found within the VoP draft under ‘related returns,’ serves as a critical tool for assessing the potential impact on the applicant’s business model, capital adequacy, IT infrastructure, and indemnity insurance. It delves into various aspects, including the firm’s current Financial Promotions Policy, monitoring procedures for approved firms, data reporting to the Board, historical approval trends, and projected revenue from offering approval services.
Upon successful approval as a Section 21 approver, firms must adhere to ongoing reporting obligations, including the submission of a REP024 – Financial Promotions, Aggregated Biannual report through RegData every six months.
Authorised firms that have not submitted their applications by 6 February 2024 when the window closes, will no longer be able to approve financial promotions, unless an exemption applies or until they have applied for and been granted permission to approve. For firms that have applied during the initial window, the FCA has advised that they may continue to approve financial promotions for unauthorised firms until they receive a determination on their application.
How we can help
fscom has been supporting firms in navigating the process of preparing and submitting Variation of Permission applications and accompanying financial promotions forms. We help firms with putting in place appropriate systems and controls and articulating this framework to the regulator as part of the application process. .
Our expertise can streamline the compliance journey, ensuring firms meet regulatory deadlines while maintaining operational continuity.
For more information or if you would like to discuss how we can help in the preparation and submission of VoP applications, please reach out to Azariah today.
This post contains a general summary of advice and is not a complete or definitive statement of the law. Specific advice should be obtained where appropriate.