PERG 8.2 Introduction

Another consequence of a breach of section 21 of the Act is that certain agreements could be unenforceable (see section 30 of the Act (Enforceability of agreements resulting from unlawful communications)). This applies to agreements entered into by a person as a customer as a consequence of a communication made in breach of section 21.

An authorised person will not breach section 21 when communicating a financial promotion. Nevertheless, this guidance may be relevant where an authorised person needs to know whether COB 3, ICOB 3, or MCOB 3 applies to a particular communication. For example, to find out if the communication would be subject to an exemption if it were made by an unauthorised person (for example, see COB 3.2.4 R and COB 3.2.5 R (2)).

A person who is concerned to know whether his communications will require approval or, if he is an authorised person, whether COB 3, ICOB 3, or MCOB 3 will apply to his communications will need to consider the following:

1. (1)

   am I making a communication or causing a communication to be made? (see PERG 8.6);

2. (2)

   if so, is it an invitation or inducement? (see PERG 8.4);

3. (3)

   if so, does the invitation or inducement relate to a controlled investment? (see PERG 8.7);

4. (4)

   if so, is the invitation or inducement to engage in investment activity? (see PERG 8.7);

5. (5)

   if so, is it made in the course of business? (see PERG 8.5);

6. (6)

   if so, and the financial promotion originates outside the United Kingdom, is it capable of having an effect in the United Kingdom? (see PERG 8.8);

7. (7)

   if so, or if the answer to (5) is yes and the financial promotion was made in the United Kingdom, is the promotion exempt? (see PERG 8.12 to PERG 8.15 and PERG 8.21);

8. (8)

   if not, am I an authorised person?

COB 3.12.2 R

One of the main effects of the Act is to bring together in one statute the regulation of persons who provide financial services. These would previously have been regulated under the Financial Services Act 1986, the Banking Act 1987, the Insurance Companies Act 1982 or under laws relating to building societies, friendly societies and credit unions. The Act also consolidates the provisions of those statutes which governed advertising and making unsolicited personal communications.

The restriction in section 21 applies to all forms of communication such as advertising, broadcasts, websites, e-mails and all other forms of written or oral communication whether sent to one person or many. However, the restrictions only apply to a communication made in the course of business and not, for example, to personal communications between individuals.

There are extensive exemptions in the Financial Promotion Order. This is explained in greater detail in PERG 8.11 to PERG 8.15 and PERG 8.21.