Schedule 5: Financial promotion: related amendments
Paragraph 1 is self-explanatory.
	Paragraph 2 refers to section 1H of FSMA 2000. The amendment expands the definition of "regulated financial services" to now include services provided by authorised firms communicating, or approving communications by others, of "inducements" to engage in investment activity or claims management activity. Inclusion of the term "inducement" provides that the FCA’s operational objectives are applied to the full range of financial promotion activity and specifically as it relates to the new section 55NA(7) and (8)(b) of FSMA 2000.
	Paragraph 3 refers to section 25 of FSMA 2000. The change amends the reasonable grounds for a defence relating to a contravention of the general restriction on financial promotions under section 21 of FSMA 2000, to accommodate the new subsection 2A. This change means that in proceedings for an offence under section 25 of FSMA 2000, it is a defence for the accused to show that they believed on reasonable grounds that the communication had been approved by an authorised firm who had been granted permission under the regulatory gateway or was otherwise exempt.
	Paragraph 4 refers to section 55A of FSMA 2000, which relates to an application for permission to carry on one or more regulated activities. This amendment clarifies that an application for permission under the regulatory gateway is distinct and separate from this.
	Paragraph 5 refers to section 55O of FSMA 2000, which relates to the imposition of a requirement where control is acquired over a UK authorised firm with a Part 4A permission and there are no grounds for the FCA to exercise its own initiative power. The amendments take account of the regulatory gateway regime for these purposes.
	Paragraph 6 refers to section 55R of FSMA 2000. This amendment expands the remit within which the regulator can consider persons connected with a firm applying for a permission. When considering a new application under the regulatory gateway, or a variation or cancellation of an existing gateway permission, the regulator may consider persons connected with that firm where it is relevant.
	Paragraph 7 refers to section 55U of FSMA 2000, which relates to applications under Part 4A to carry on regulated activities. This amendment sets out that where an application is made for permission in respect of the regulatory gateway, or for variation of an existing permission, a statement must be included of the permission or variation sought.
	Paragraph 8 refers to section 55V of FSMA 2000. The amendment expands the requirement on the regulator to provide written notice when it grants an application for permission under the regulatory gateway, or for the variation or cancellation of such a permission.
	Paragraph 9 refers to section 55X of FSMA 2000, specifying when the regulator must give warning and decision notices to applicants. The amendment expands the obligation on the regulator to give the applicant a warning notice when it proposes to grant or vary a permission under the regulatory gateway, subject to other terms the regulator considers appropriate (which may be narrower than the application sought). In addition, if the regulator makes a decision to grant or vary a permission so that it is subject to other such terms, the regulator must give the applicant a decision notice.
	Paragraph 10 refers to section 55Y of FSMA 2000, which relates to the procedures the regulator must follow when exercising its own-initiative power. The amendments provide that when the regulator exercises its own-initiative power to vary, or proposes to vary, a gateway permission, it must follow the pre-existing procedure under section 55Y of FSMA 2000. This includes a requirement that if the FCA either proposes to vary a permission under the regulatory gateway, or varies a permission under the regulatory gateway with immediate effect, it must give the firm written notice.
	Paragraph 11 refers to section 55Z of FSMA 2000, which relates to the procedure for cancelling a permission. The amendments expand the remit of this procedure to take into account the regulatory gateway regime.
	Paragraph 12 refers to section 55Z3 of FSMA 2000, which relates to an applicant’s right to refer a regulator’s decision or exercise of its own-initiative variation or requirement power, to the Upper Tribunal. The amendment allows a firm to refer the FCA’s exercise of its own-initiative power to vary or cancel a permission under the regulatory gateway to the Upper Tribunal.