The Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) (No. 2) Order 2023

The Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) (No. 2) Order 2023 was recently published on the official journal of the UK. The new order primarily focuses on amending the criteria and procedures for classifying individuals as high net worth individuals and self-certified sophisticated investors for purposes of determining their status and permitting eligible investments only, as well as the associated documentation and communication requirements of firms. The amendments affect several pieces of legislation, including the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529), the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 (SI 2001/1060), and the Financial Services and Markets Act 2000 (Exemptions from Financial Promotion General Requirement) Regulations 2023 (SI 2023/966), and provide for the following:
– the order removes the requirement for individuals to be „certified“ as high net worth individuals or self-certified sophisticated investors by financial institutions – other than the self-certification process.
– the order introduces updated income and asset thresholds for individuals to be considered high net worth individuals. Specifically, the net income and net asset thresholds for individuals qualifying as high net worth individuals are adjusted to £170,000 and £430,000, respectively, to account for inflation in recent years (Schedule 1).
– the order also introduces an increased annual company turnover threshold for directors of companies to be considered self-certified sophisticated investors. The new threshold is now set at £1,600,000 (see Schedule 2 in this context).
– the order removes the criteria of having made an investment in an unlisted company in the previous two years from the list of criteria that have to be met to be classified as a self-certified sophisticated investor.
– the order introduces new investor statements for completion and signature by individuals seeking classification as high net worth individuals or self-certified sophisticated investors. These statements contain the updated criteria and thresholds for classification and are appended as Schedule 3 and Schedule 4 of the order.
– the order requires that financial entities promoting investments now provide contact information to investors in addition to a warning when making communications related to high net worth individuals or self-certified sophisticated investors. This includes providing the full name of the person making the communication, a postal or electronic address for further inquiries, and, if applicable, details of the country or territory of incorporation, registered office address, and company number or unique identification equivalent.
– the order also includes consequential amendments to other legislation to reflect the changes made by the preceding provisions. These amendments ensure consistency and alignment across related legislative instruments.
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Please note: as these are only the key provisions of the new order, please refer to the original legal document for more detailed, comprehensive information.