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COB 3.12 Communication and approval of financial promotions for an overseas person or an unauthorised person

Approval of financial promotions

COB 3.12.1G
  1. (1)

    Section 21(1) of the Act (Restrictions on financial promotion) prohibits an unauthorised person from communicating a financial promotion, in the course of business, unless an exemption applies or the financial promotion is approved by a firm. An overview of the main exemptions in the Financial Promotion Order is in COB 3 Annex 1 G and further guidance is provided in AUTH App 1 (Financial promotion and related activities), in particular, AUTH App 1.9 (Circumstances where the restriction in section 21 does not apply).1

  2. (2)

    Most of the rules in this chapter apply when a firm approves a financial promotion in the same way as when a firm communicates a financial promotion itself. A firm therefore has a similar responsibility for a financial promotion that it approves as for one that it communicates. For example, a firm which approves a non-real time financial promotion must:

    1. (a)

      if COB 3.6.1 R applies, confirm that the financial promotion complies with the rules in this chapter; and

    2. (b)

      if COB 3.8.4 R (1) applies, be able to show that it has taken reasonable steps to ensure that the financial promotion is clear, fair and not misleading.

  3. (3)

    A firm may also wish to approve a financial promotion that it communicates itself. This would ensure that an unauthorised person who then also communicates the financial promotion to another person will not contravene the restriction on financial promotion in section 21(1) of the Act (Restrictions on financial promotion).

  4. (4)

    A firm which approves a financial promotion that is exempt under COB 3.2.5 R (Exemptions) or COB 3.3.1 R (Application; where?) must still comply with certain rules in this chapter (see COB 3.2.4 R (2) and COB 3.3.3 R (2)).

No approval of real time financial promotions

COB 3.12.2R

Approval of financial promotions when not all the rules apply

COB 3.12.3R

If a firmapproves a financial promotion in circumstances in which one or more of the rules in this chapter, or the prohibition in section 240(1) of the Act (Restriction on approval), are expressly disapplied, the approval must be given on terms that it is limited to those circumstances.

COB 3.12.4G

For example, if a firmapproves a financial promotion relating to an unregulated collective investment scheme under one or more of the exemptions in the table in COB 3 Annex 5 R, the approval must be limited to communication of the financial promotion to the relevant class of person in the left hand column of the table. Similarly, if a firmapproves a financial promotion for communication to market counterparties and intermediate customers (see COB 3.2.5 R), the approval must be limited to communication to such persons.

COB 3.12.5G

If an approval is limited in accordance with COB 3.12.3 R, and an unauthorised personcommunicates the financial promotion to persons not covered by the approval, the unauthorised person may commit an offence under section 21(1) of the Act (Restrictions on financial promotion). A firm giving a limited approval may wish to advise the unauthorised person accordingly.

Specific non-real time financial promotions for overseas persons

COB 3.12.6R

A firm must not communicate or approve a specific non-real time financial promotion which relates to an investment or service of an overseas person, unless:

  1. (1)

    the financial promotion makes clear which firm has approved or communicated it and, where relevant, explains:

    1. (a)

      that the rules made under the Act for the protection of private customers do not apply;

    2. (b)

      the extent and level to which the compensation scheme will be available, or if the scheme will not be available, a statement to that effect; and

    3. (c)

      if the communicator wishes, the protection or compensation available under another system of regulation; and

  2. (2)

    the firm has no reason to doubt that the overseas person will deal with private customers in the United Kingdom in an honest and reliable way.

COB 3.12.7G

In considering which points are relevant for the purposes of COB 3.12.6 R (1), the activities, and the associated products or services of the overseas person will need to be separately considered.