Financial promotion exemptions for high net worth individuals and sophisticated investors: a consultation

The Financial Promotions Order contains exemptions for high net worth individuals and sophisticated investors from the financial promotion restriction. These exemptions help small and medium sized enterprises raise finance from sophisticated private investors, or ‘business angels’ without the cost of having to comply with the financial promotions regime.

This consultation proposes reforms to these exemptions, responding to economic, social and technological changes that have occurred since the exemptions were introduced in 2001, and to instances of misuse of the exemptions identified by the Financial Conduct Authority.

The proposed reforms look to:

• Ensure that thresholds for exempt investors are calibrated to reflect investors’ experience or their ability to absorb losses

• Reduce the risk that the exemptions are used for promotions to investors who do not meet the conditions

• Ensure that, where exemptions are used, investors understand the regulatory protections they are losing and are able to take responsibility for their investment decisions