Related provisions for PERG 8.14.11

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PERG 8.14.3GRP
Article 28 exempts financial promotions, other than unsolicited real time financial promotions, which are one-off in nature. Whether or not any particular financial promotion is one-off in nature will depend upon the individual circumstances in which it is made. Article 28(3) sets out conditions which, if all are met, are conclusive. Otherwise they are indicative. Even if none are met the exemption may still apply. This makes it clear that the overriding issue is whether the financial
PERG 8.14.4GRP
The FCA considers the effect of each of the conditions in PERG 8.14.3G (1) to PERG 8.14.3G (3) to be as follows.(1) The first condition requires the financial promotion to be made, so ruling out any financial promotions which are directed at persons. The effect of article 6(b) and (e) of the Financial Promotion Order is that a communication is made to a person when it is addressed to him and that person to whom the financial promotion is addressed is its recipient. This means
PERG 8.14.7GRP
A financial promotion may fail to satisfy all of the indicators referred to in PERG 8.14.4 G because it is addressed to more than one recipient and they are not persons who will engage in investment activity or engage in claims management activity12 jointly. In the FCA's view, such a financial promotion is capable of being one-off where the persons are to enter into the same transaction and the promotion is tailored to their individual circumstances. This may typically happen
PERG 8.14.13GRP
Whether or not it would be reasonable to believe that any person understands the risks associated with the investment activity covered in a financial promotion or would expect to be contacted about it must be judged on the particular circumstances. In the FCA's opinion, the exemption requires that the recipient has the required understanding of risk at the time the promotion is made to him. However, it would be reasonable to believe that a person understands the risk involved
PERG 8.14.24GRP
A person seeking to make a financial promotion to another person may wish to make enquiries of that person to establish whether he is certified. Unless another exemption applies or the financial promotion is approved by an authorised person, such enquiries will not be possible if the enquiry communication is an inducement or invitation to engage in investment activity. In the FCA's8 view, a communication which is merely an enquiry seeking to establish that a person holds a current
PERG 8.14.27GRP
To be a sophisticated investor for the purposes of article 50, the recipient of a financial promotion must have a current certificate from an authorised person stating that he has enough knowledge to be able to understand the risks associated with the description of investment to which the financial promotion relates. Where the financial promotion is an outgoing electronic commerce communication3, the certificate may be signed by a person who is entitled, under the law of an EEA
The Treasury, responding to consultation on the draft Financial Promotion Order, stated its intention that only communications containing a degree of incitement would amount to ‘inducements’ and that communications of purely factual information would not. This is provided the facts are presented in such a way that they do not also amount to an invitation or inducement. This was made clear both in the Treasury’s consultation document on financial promotion and during the passage
PERG 8.4.10GRP
Such advertisements are almost invariably intended to create awareness, hopefully generating future business. So they may or may not be inducements. This depends on the extent to which their contents seek to persuade or incite persons to contact the advertiser for details of its services or to do business with it. Merely stating past achievements with no contact details will not be enough to make such an advertisement an inducement. Providing contact details may give the advertisement
PERG 8.4.15GRP
Journalism can take many forms. But typically a journalist may write an editorial piece on a listed company or about the investments or investment services that a particular firm provides or the controlled claims management activity that it carries on8. This may often be in response to a press release. The editorial may or may not contain details of or, on a website, a link to the site of the company or firm concerned. Such editorial may specifically recommend that readers should
PERG 8.4.21GRP
These will be advertisements that contain encouragement to contact the advertiser. They are likely to be inducements to do business with him or to get more information from him. If so, they will be inducements to engage in investment activity or to engage in claims management activity8 if they seek to persuade or incite persons to buy or sell investments or to get investment services or services which constitute a controlled claims management activity8. See PERG 8.4.7 G for more
PERG 8.4.24GRP
Trading methods and techniques, such as traded options training courses and software-based or manual trading tools will, in many cases, be too remote from any eventual investment dealing activities to be inducements to engage in investment activity. Promotions of such things will be inducements (or invitations) to receive training and general trading tips and techniques. However, such things may be sold on the basis that they are almost certain to produce profits from the trading
PERG 8.4.25GRP
These are clearly invitations or inducements. Whether they will involve invitations or inducements to engage in investment activity or to engage in claims management activity8 rather than to attend the meeting or receive the call or visit, will depend upon their purpose and content. PERG 8.4.7 G discusses communications which are a significant step in the chain of events leading to an agreement to engage in investment activity or to engage in claims management activity8. The purpose
PERG 8.4.27GRP
A person ('A') may enquire:(1) whether another person is certified as a high net worth individual or a sophisticated investor so that A may determine whether an exemption applies; or(2) whether a person has received material sent to him; or(3) how a person might propose to react to a take-over offer. or8(4) whether a person has been involved in an accident.8Enquiries of this or a similar kind will not amount to inducements to engage in investment activity or to engage in claims
PERG 8.4.28GRP
Solicited or accompanying material which does not contain any invitation or inducement to engage in investment activity will not itself be a financial promotion. This is provided that the material is not part of any financial promotion which may accompany it. This is explained in greater detail in PERG 8.4.29 G to PERG 8.4.30 G.
PERG 8.4.30GRP
The person who responds to the request for the material in the circumstances in PERG 8.4.29 G may make a financial promotion in the form of a covering letter or oral communication ('C'). This will not mean that the material accompanying C must itself be treated as an inducement. This will depend on the circumstances. The material itself would only become an inducement if it is turned into part of the financial promotion in C. For example, C may refer to the contents or part of
PERG 8.4.34GRP
Employers and their contracted service providers 6may communicate with employees on matters which involve controlled investments. For example, work-related insurance, staff mortgages,6personal pension schemes (including stakeholder schemes) and other employee benefit schemes other than occupational pension schemes. Interests under the trusts of an occupational pension scheme are not a controlled investment (see paragraph 27 (2) of Schedule 1 to the Financial Promotion Order).In
PERG 8.12.5GRP
Articles 12(3) and (4) of the Financial Promotion Order (subject to article 12(5) – see PERG 8.12.8 G) have the effect that, where a financial promotion is directed from a place outside the United Kingdom, it will be conclusive proof that it is not directed at persons in the United Kingdom even if it is received by a person in the United Kingdom, if:(1) the financial promotion is not referred to in or directly accessible from another communication (for example, an advertisement
PERG 8.12.6GRP
There is no definition in the Financial Promotion Order of what ‘proper systems and procedures’ are, and the matter will ultimately be for the courts to determine. This is unsurprising as systems and procedures may take many different forms depending upon the precise circumstances in which financial promotions are made. But it is clear that persons seeking conclusive proof that the exemption applies must consciously make arrangements to prevent their dealing with certain recipients
PERG 8.12.17GRP
Journalists may be able to take advantage of this exemption when writing about investments generally. But the exemption would not apply if the financial promotion recommends the purchase or sale of particular investments such as XYZ Plc shares. This is because it will be identifying XYZ Plc as a person who provides the controlled investment (being its shares) and as a person who carries on the controlled activity of dealing in securities and contractually based investments (by
PERG 8.12.21GRP
Financial promotions made only to or directed only at certain types of person who are sophisticated enough to understand the risks involved are exempt. These are:(1) authorised persons;(2) exempt persons (where the financial promotion relates to a controlled activity which is a regulated activity for which the person is exempt);(3) governments and local authorities; and(4) persons whose ordinary business involves carrying on a controlled activity of the kind to which the financial
PERG 8.12.22GRP
Article 19(4) sets out conditions which, if all are satisfied, offer conclusive proof that a financial promotion is directed only at investment professionals. These conditions relate to indications accompanying the financial promotion and the existence of proper systems and procedures. The guidance about proper systems and procedures in PERG 8.12.6 G applies equally to article 19. Article 19(6) specifically states that a financial promotion may be treated as made only to or directed
PERG 8.12.23GRP
The broad scope of the restriction in section 21 of the Act will inevitably mean that it will, from time to time, apply to journalists and others who make their living from commenting on news including financial affairs (such as broadcasters). This is liable to happen when such persons offer share tips or recommend the use of a particular firm for investment purposes. Such tips or recommendations are likely to amount to inducements to engage in investment activity or to engage
PERG 8.12.25GRP
With this objective in mind, the exemption in article 20 applies to any non-real time financial promotion the contents of which are devised by a person acting as a journalist where the financial promotion is in:1(1) a newspaper, journal, magazine or other periodical publication;(2) a regularly updated news or information service (such as a website or teletext service); or(3) a television or radio broadcast or transmission.In addition, the publication, service or broadcast must
PERG 8.21.1GRP
There is a general concern that the practice of companies issuing statements and giving briefings may involve a financial promotion. These arise sometimes as a result of requirements imposed by a listing authority or an exchange or market, PERG 8.4.14 G offers guidance on when such statements or briefings may amount to or involve an inducement to engage in investment activity. It indicates that whilst statements of fact alone will not be inducements, there may be circumstances
PERG 8.21.8GRP
Article 43 applies to non-real time and solicited real time financial promotions made by, or on behalf of,1 a company ('C') to persons who, in broad terms, are:(1) members or creditors of C or a group member of C ('G');(2) entitled to a relevant investment issued by C or G;(3) entitled to become a member of C or G;(4) entitled to have transferred to them title to a relevant investment issued by C or G.The financial promotion must relate only to relevant investments issued or to
PERG 8.21.9GRP
A 'relevant investment' in article 43 means:(1) shares or debentures or alternative debentures;3 and(2) warrants and certificates representing certain securities relating to (1) and issued by G or a person acting on behalf of or under arrangements made with C.Article 43 allows a company to communicate a financial promotion to its shareholders about rights issues or a cash offer by a third party for their shares. It also allows a company to communicate with its creditors about
PERG 8.10.11GRP
PERG 8.6.9 G explains that article 6 of the Financial Promotion Order has the broad effect that a communication is made to another person where it is addressed to a particular person or persons. It also states that a ‘recipient’ of a communication is the person or persons to who it is made (that is to whom it is addressed). This takes on importance where certain exemptions which apply to real time financial promotions made to a person are concerned. It appears to the FCA that,
PERG 8.10.13GRP
There will be occasions when financial promotions are received by persons other than those in PERG 8.10.11G (1) or PERG 8.10.11G (2) who will not have solicited them. For example, a more distant relative or friend ('F') who acts as a support to the person who is to engage in investment activity or to engage in claims management activity1 ('P') or P’s professional adviser ('A'). As explained in PERG 8.6.10 G, in such cases the financial promotion will not be made to F or A unless
COBS 4.10.1GRP
The rules in SYSC 3 (and also for Solvency II firms, the PRA Rulebook: Solvency II firms: Conditions Governing Business)1 and SYSC 4 require a firm that communicates with a client in relation to designated investment business, or communicates or approves a financial promotion, to put in place systems and controls or policies and procedures, or an effective internal control system,1 in order to comply with the rules in this chapter.
The basic restriction on the communication of financial promotions is in section 21(1) of the Act. Sections 21(2) and (5) disapply the restriction in certain circumstances. Their combined effect is that a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless:(1) he is an authorised person; or(2) the content of the communication is approved for the purposes of section 21 by an authorised person; or(3) the communication
Section 21 of the Act does not itself (other than in its heading and side-note) refer to a ‘financial promotion’ but rather to the communication of ‘an invitation or inducement (a)1 to engage in investment activity or (b) to engage in claims management activity1’. References in this guidance to a financial promotion mean an invitation or inducement to engage in investment activity or to engage in claims management activity1.
1This chapter applies to a firm:(1) communicating with a client in relation to its designated investment business (other than MiFID, equivalent third country or optional exemption business)10;(1A) 10communicating with a client in relation to its MiFID, equivalent third country or optional exemption business;(2) communicating or approving a financial promotion other than:(a) a financial promotion of qualifying credit, a home purchase plan or a home reversion plan; or(b) a financial
(1) In relation to communications by a firm to a client in relation to its designated investment business this chapter applies in accordance with the general application rule and the rule on business with UKclients from an overseas establishment (COBS 1 Annex 1 Part 2 paragraph 2.1R).(2) In addition, the financial promotion rules apply to a firm in relation to:(a) the communication of a financial promotion to a person inside the United Kingdom;(b) the communication of a cold call
PERG 8.6.10GRP
In the FCA's opinion, the matters in PERG 8.6.9 G have the following effects.(1) Any one particular communication will either be real time or non-real time but not both. This is because:(a) a real time communication is one made in the course of an interactive dialogue (see PERG 8.10.2 G for guidance on the meaning of real time);(b) those exemptions which concern real time communications apply only to communications which are made to persons and not those which are directed at
The effect of section 21 of the Act (Restrictions on financial promotion) is that in the course of business, an unauthorised person must not communicate an invitation or inducement to engage in investment activity or to engage in claims management activity3 unless either the content of the communication is approved for the purposes of section 21 by an authorised person or it is exempt. Under section 25 of the Act (Contravention of section 21), a person commits a criminal offence
A person who is concerned to know whether his communications will require approval or, if he is an authorised person, whether the appropriate financial promotion rules1 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) if so, is it an invitation or inducement? (see PERG 8.4);(3) if so, does the invitation or inducement relate to a controlled investment? (see PERG 8.7);(4)
The overall effect is that a financial promotion must relate in some way to a controlled investment and may be summarised as the communication, in the course of business, of an invitation or inducement to:(1) acquire, dispose of or underwrite certain investments or exercise rights conferred by such an investment for such purpose or for the purpose of converting it; or(2) receive or undertake investment services such as dealing in investments as principal or as agent, managing
In the FCA's opinion, section 21 will apply to a communication (made in the course of business) if it contains an invitation or inducement to engage in investment activity which is addressed to a particular person or to persons generally. Where this is the case, it will not matter that the communication may be physically delivered to someone other than the person who is intended to engage in investment activity. PERG 8.6.10 G gives more guidance on this.
(1) Subject to (2) and (3), this section applies to a firm in relation to:(a) the provision of information in relation to its designated investment business; and(b) the communication or approval of a financial promotion;where such information or financial promotion is addressed to, or disseminated in such a way that it is likely to be received by, a retail client.(2) This section does not apply to a firm communicating in relation to its MiFID, equivalent third country or optional
(1) A firm must ensure that information contained in a financial promotion is consistent with any information the firm provides to a retail client in the course of carrying on designated investment business6.6(2) This rule does not apply to a financial promotion to the extent that it relates 6a pure protection contract that is a long-term care insurance contract.
The rules in this chapter adopt various concepts from the restriction on financial promotions by unauthorised persons in section 21(1) of the Act (Restrictions on financial promotion). Guidance on that restriction and the communications which are exempt from it is contained in PERG 8 (Financial promotion and related activities) and that guidance will be relevant to interpreting these rules. In particular, guidance on the meaning of:(1) 'communicate' is in PERG 8.6 (Communicate);
PERG 8.22.2GRP
The test for whether the contents of a particular website may or may not involve a financial promotion is no different to any other medium. If a website or part of a website, operated or maintained in the course of business, invites or induces a person to engage in investment activity or to engage in claims management activity2, it will be a financial promotion. The FCA takes the view that the person who caused the website to be created will be a communicator. So, any software
PERG 8.22.3GRP
The Internet also allows hypertext links, where two different sites in the Internet can be connected almost instantaneously by simply clicking on the link. The FCA's1 views on the position of hypertext links (which should be read with the remainder of PERG 8, especially PERG 8.4 (Invitation or inducement)) are as follows.1(1) A hypertext link may or may not be a financial promotion in itself. This will depend on the nature of the hypertext link and the context in which it is placed.
The purpose of this guidance is three-fold:11(1) to outline the restriction on financial promotion under section 21 of the Act (Restrictions on financial promotion) and the main exemptions from this restriction; and(2) to outline the main circumstances in which persons who are primarily involved in making or helping others to make financial promotions may be conducting regulated activities requiring authorisation or exemption themselves; this part of the guidance may also be of
In particular, this guidance covers:(1) invitations and inducements (see PERG 8.4);(2) meaning of 'in the course of business' (see PERG 8.5);(3) meaning of 'communicate' (see PERG 8.6);(4) meaning of 'engage in investment activity' (see PERG 8.7);(4A) meaning of ‘engage in claims management activity’ (see PERG 8.7A);2(5) meaning of 'having an effect in the United Kingdom' (see PERG 8.8);(6) circumstances where the restriction in section 21 does not apply (see PERG 8.9);(7) types
(1) A firm must ensure that information that contains an indication of future performance of relevant business, a relevant investment, a structured deposit or a financial index, satisfies the following conditions:(a) it is not based on and does not refer to simulated past performance;(b) it is based on reasonable assumptions supported by objective data;(c) where6 the indication is based on gross performance, the effect of commissions, fees or other charges is disclosed6; (ca)
SUP 12.2.8GRP
(1) An introducer appointed representative is an appointed representative appointed by a firm whose scope of appointment must, under SUP 12.5.7 R, be limited to:(a) effecting introductions to the firm or other members of the firm's group; and5(b) distributing non-real time financial promotions which relate to products or services available from or through the firm or other members of the firm's group.5(2) The permitted scope of appointment of an introducer appointed representative
SUP 12.2.13GRP
(1) An introducer is an individual appointed by a firm or by an appointed representative of such a firm to carry out, in the course of designated investment business, either or both of the following activities:4(a) effecting introductions; (b) distributing non-real time financial promotions.(2) An introducer is not an exempt person under section 39 of the Act (unless he is also an introducer appointed representative) and hence cannot benefit from the exemption to carry on regulated
PERG 8.11.5GRP
A number of exemptions require that a financial promotion must be accompanied by certain indications. Article 9 of the Financial Promotion Order states that indications must be presented in a way that can be easily understood and in such manner as is ‘best calculated’ to bring the matter to the recipient’s attention. In the FCA's opinion, the expression ‘best calculated’ should be construed in a sensible manner. It does not, for instance, demand that the indication be presented