New regulatory powers Regulatory gateway for financial promotions
Section 21 of FSMA 2000 provides that a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity or to engage in claims management activity (referred to as a ‘"financial promotion"), unless they are an authorised firm, the communication is approved by an authorised firm, or there is an applicable exemption under the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 ("FPO"). An authorised firm is primarily a person that has permission from the FCA or the PRA to carry on one or more regulated activities, in accordance with section 31 of FSMA 2000 (referred to as "Part 4A permission"). Engaging in investment activity is defined in section 21(8) of FSMA 2000 as relating to either a controlled activity or a controlled investment, which are further defined in Schedule 1 to FPO. The exemptions to the restriction in section 21 of FSMA 2000 are also set out in the FPO.
	Under section 25 of FSMA 2000 it is a criminal offence for an unauthorised firm to communicate a financial promotion in breach of section 21 of FSMA 2000. Firms that commit such an offence can be liable to a fine and/or up to two years’ imprisonment. In addition, agreements entered into as a result of a financial promotion that contravenes section 21(1) of FSMA 2000 are, among other things, unenforceable against any customer (section 30 of FSMA 2000).
	The Act inserts section 21(2A) of FSMA 2000 which provides that an authorised firm can only approve a financial promotion within the scope of a permission granted by the FCA or within an exemption. The Act provides HM Treasury with a power to specify the relevant exemptions from the requirement for FCA permission to approve promotions. The Act also inserts section 55NA of FSMA 2000 which provides the FCA with powers to grant permission and to vary or cancel that permission, either on the application of the authorised firm or on the FCA’s own initiative. The FCA’s powers are exercisable primarily by reference to its operational objectives.