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Financial
promotions are ‘communications’ which
‘induce and invite’ an investor
to ‘enter into regulated activity’.
It is often a grey area as to whether a communication
is caught by the rules, especially in relation to
whether it ‘invites’ or not. If a company
gets this wrong and is not FSA regulated itself,
it could be committing a breach of the Financial
Services and Markets Act if it issues the communication.
Alternatively, if the firm is FSA regulated but
issues a financial promotion which does not comply
with the rules, or has not been approved as
a financial promotion, this will be a breach.
A firm needs to ensure it has appropriate
systems and controls to:
- identify
which communications it issues are caught by the
rules and
- ensure
that the content of such communications comply with
the FSA rules
but also
- that
they can evidence an appropriate individual has
formally approved that
the financial
promotion complies with the rules prior to its issue.
Gem Compliance can
review any of your firm’s communications to
identify whether these are caught by the rules.
For FSA regulated companies, we can also review
communications to ensure compliance with the FSA
rules prior to it being formally signed off and
issued by you. We can review your existing systems
and controls on financial promotion approvals including
staff
awareness on what constitutes a financial promotion.
We can also help you design approval procedures
and checklists to evidence that the FSA rules on
approval are being met.
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