49/99
17 March 1999
TREASURY CONSULTATION ON MODERNISING THE REGULATION OF FINANCIAL PROMOTION
A consultation document on the financial promotion regime under the Financial Services and Markets Bill is published by the Treasury today.
Announcing publication, Economic Secretary Patricia Hewitt said
"The regulation of the promotion of financial services is an important aspect of the new regulatory regime on which full consultation is needed. Now that shares, insurance and banking can be promoted on the Internet, the old rules on investment advertisements and cold calling are becoming out of date. We need a new regime of financial promotion that is technologically neutral and can quickly adapt to future changes. We want to be able to take the best possible account of the views of consumers, financial services firms and companies - particularly smaller companies - seeking to raise capital.
We have therefore decided to consult in two stages. This consultation paper sets out various aspects of the approach we propose for the new regime, in particular our approach to exemptions from the prohibition on financial promotion by unauthorised persons. We will take careful note of responses in our preparation of secondary legislation, which will then be published for comment in a further round of consultation. In drafting the secondary legislation we intend, wherever possible, to avoid unnecessary regulation.".
Comments on the consultation document are sought by 30 April 1999. Following a consideration of responses, the Treasury will publish a further consultation document containing draft legislation setting out exemptions from the prohibition on unauthorised persons making financial promotions.
NOTES TO EDITORS
1. The Financial Services and Markets Bill: A Consultation Document was published, with a document containing an overview of regulatory reform, in July last year (HMT press release 126/98). The draft Bill establishes a single regulatory system in place of the existing separate arrangements for different sectors. One aspect of this is to bring the regulation of promotion of investments, investment services, insurance and banking into one regime.
2. HM Treasury published two further consultation documents last month: Draft recognition requirements for Investment Exchanges and Clearing Houses (HMT press release 22/99). Regulated Activities - A Consultation Document (HMT press release 34/99).
3. On 5 March 1999, HM Treasury published a progress report containing the government response to the extensive consultation comments on the July 1998 draft Bill and consultation document (HMT press release 44/99).
4. Announcement of publication of the financial promotion consultation document was made in response to a Parliamentary Question from Ms Jackie Lawrence MP, Lab Preseli Pembrokeshire.
5. Financial promotion by unauthorised persons is prohibited by the draft Bill, except where an exemption applies. Exemptions are currently given in particular circumstances where regulation is not appropriate, i.e. for advertisements as part of employee share schemes or advertisements to professional investors. The consultation document sets out Treasury's proposed approach to exemptions under the financial promotion regime.
6. Responses should be sent to the address below by 30 April 1999. Regulatory Reform Team HM Treasury Parliament Street London SW1P 3AG
7. Non-media copies are available, free of charge, from 020 7270 4848.
8. Media enquiries and requests for copies of the financial promotion consultation document should be addressed to Charles Keseru in the Treasury press office on 020 7270 5188.