Publication by FSA of Guidance on Financial Promotion

On 17th May 2002 the FSA published the final form of its guidance on Financial Promotion under the Financial Services and Markets Act 2000. The Guidance, which is contained in the Financial Promotion Guidance Instrument 2002, is the revised version of the draft guidance issued by the FSA in August 2001. It provides clarification of a number of issues which were raised by commentators in relation to the draft guidance. It is hoped that its publication will help companies and their advisers to navigate their way through the complexities of the financial promotion regime.

Key elements covered by The Guidance

• It indicates how the FSA will interpret the regime in practice; although it will not be binding on the courts (which might be used, for example, by a party claiming that an agreement should not be enforceable because it was made as a result of an unlawful financial promotion), it seems likely that a court would attach considerable weight to a party's (non-)compliance with the Guidance in making a decision in such circumstances
• It includes a discussion of the meaning of 'invitation' and 'inducement' (which are not defined in the legislation)
• It puts forward an objective test for determining whether a communication has a promotional element
• It provides specific guidance on a number of particular communications including:
  • web links
  • publications or broadcasts of prices of investments
  • company statements and announcements
  • analysts briefings
  • performance tables
  • share purchase agreements
  • invitations to attend meetings or to receive telephone calls or visits
  • solicited and accompanying material
  • telephone services
  • communications by employers to their employees

More detailed guidance is also given on some of the exemptions available under The Financial Services and Markets Act 2000 (Financial Promotion) Order 2001, including the exemptions for promotions broadcast by a company director, one-off communications and the sale of a body corporate.

The Guidance is available from the FSA's website at the following address:

http://www.fsa.gov.uk/handbook/legal_instruments/2002/may16_fin_promo.pdf

For further information, please contact:

Nick Callister Radcliffe
Corporate Partner
Phone: +44 (0)20 7367 2394
Email: [email protected]

or

Simon Howley
Phone: +44 (0)20 7367 3566
Email: [email protected]