The government has made new regulations (the 2024 Order) to update the exemptions in the Financial Services and Markets Act 2000 (Financial Promotions) Order (2005) (the FPO), and the equivalent exemptions in the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) Order 2001 (PCIS), relating to high net worth individuals and sophisticated investors.

The changes in the 2024 Order reverse certain amendments made by recent regulations (the 2023 Order) which only came into effect on 31 January 2024. According to the explanatory memorandum, this is in response to certain sectors raising concerns about the potential unintended impacts of the 2023 Order, including on the ability of start-up businesses to obtain investment and raise finance through small-scale investors.

The financial promotion exemptions enable unauthorised firms to communicate financial promotions to high net worth individuals and sophisticated investors without requiring approval.

The 2024 Order:

  • reinstates the financial thresholds in place before the 2023 Order came into force by reducing the thresholds for the high net worth individual exemption to income of at least £100,000 (back down from £170,000) in the last financial year, or net assets of at least £250,000 (back down from £430,000) throughout the last financial year; and
  • amends the criteria for the self-certified sophisticated investor exemption by reinstating the criterion of having made two or more investments in an unlisted company in the previous two years and reducing the company turnover required to satisfy the “company director” criterion to £1 million (back down from £1.6 million).

The 2024 Order comes into effect on 27 March 2024. Investor statements that comply with the 2023 Order will remain valid until 30 January 2025. This means that those who have recently completed and signed statements complying with the 2023 Order do not need to complete and sign an updated investor statement until 31 January 2025 to fall within the exemptions.

 

Clive Cunningham
Clive Cunningham
Partner, London
+44 20 7466 2278
Marina Reason
Marina Reason
Partner, London
+44 20 7466 2288
Kelesi Blundell
Kelesi Blundell
Partner, London
+44 20 7466 7477
Erica MacDonald
Erica MacDonald
Professional Support Lawyer, London
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Patricia Horton
Patricia Horton
Professional Support Lawyer, London
+44 20 7466 2789
Lerryn Martin
Lerryn Martin
Professional Support Lawyer, London
+44 20 7466 7619