Treasury to update Fin Prom exemptions

Following its consultation on exemptions in the FPO for promotions to high net worth individuals and sophisticated investors, Treasury has decided to make some updates. It will:

  • increase the financial thresholds needed for the exemptions: while some respondents thought that raising the threshold could work against certain sectors of society who would no longer be able to benefit from the exemption, and others wanted to raise the threshold so it would cover only the richest 1% of society, the Government has decided to raise the threshold to new set amounts. Individuals will need to have income of at least £170,000 or net assets of at least £430,000 throughout the last financial year;
  • tighten other criteria necessary for the exemptions to apply to reduce the risk that ordinary consumers may be shoehorned into the exemptions: most respondents agreed that an investment into an unlisted company in the prior 12 months was no longer a good indicator of sophistication – the the criterion of more than one investment in an unlisted company in the past 2 years has been removed, and the company turnover needed for a director to satisfy the “company director” test is increased to £1.6m; and
  • strengthen the required investor statements: there were divergent views on whether to put more onus on firms to check investors meet the relevant criteria, but nearly all respondents agreed that the investor statements should be updated to achieve greater engagement from investors and awareness of the regulatory protections they lose when the exemptions are applied.  Businesses will now have to provide details of themselves in promotions made using the exemptions, the HNWI exemption will no longer include the word “certified”, and the HNWI and SCSI statements will be updated.

The changes will apply to both the FPO and the CISPO. Treasury has published the draft amending legislation, which will take effect from 31 January 2024.


Emma Radmore