Government Reverses Changes to Financial Promotion Exemptions
On 6 March 2024, the UK government reversed certain changes made to exemptions for high net worth individuals and self-certified sophisticated investors in the Financial Promotion Order 2005.
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On 6 March 2024, the UK government published the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment and Transitional Provision) Order 2024 (the "2024 Order"), which reverses certain changes made to exemptions for high net worth individuals and self-certified sophisticated investors in the Financial Promotion Order 2005.

Background

The Financial Promotion Order 2005 contains exemptions from the financial promotion restriction in section 21 of the Financial Services and Markets Act 2000. This includes exemptions for communications to high net worth individuals (Article 48) and self-certified sophisticated investors (Article 50A).

In 2021, HM Treasury consulted on proposed reforms to these exemptions. In November 2023, it published its response outlining changes it intended to make. These changes were implemented through the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) (No 2) Order 2023 (the "2023 Order"), which came into force on 31 January 2024 (see our article here).

Reversal of 2023 Changes

The 2024 Order reverses certain changes made by the 2023 Order, reflecting "significant concerns" raised by stakeholders about potential "unintended impacts."

Key Amendments

The 2024 Order amends the eligibility criteria for the exemptions as follows:

  • Reduces the financial thresholds to qualify as a high net worth individual to £100,000 income and £250,000 net assets.
  • Adds a criterion of making two investments in unlisted companies in two years to qualify as a self-certified sophisticated investor.
  • Reduces the company turnover requirement in the "company director" criterion to £1 million.

Transitional provisions state investor statements complying with the 2023 Order will remain valid until 30 January 2025.

The FCA commented it will continue working with the government to strengthen the financial promotions regime while ensuring business access to sustainable investment sources.