HM Treasury has published a summary of responses to its 2006 consultation on facilitating promotions in the workplace. As well as providing a summary of responses to the consultation Treasury has also indicates its intention to extend the exemption for workplace pensions promotions to third parties.
The Financial Services and Markets Act 2000 prohibits a person, in the course of business, from communicating an invitation or inducement to engage in investment activity unless the person is an authorised person, the content of the communication is approved by an authorised person or they are exempt by an order from the Treasury. Order 72 of the Financial Promotion Order 2005 provides an exemption from these restrictions for communications from an employer to an employee in relation to a group personal pension scheme or a stakeholder pension scheme.
The 2006 consultation document canvassed views on whether the current exemption should be extended to communication from third parties.
In the summary of responses the Treasury has indicated its intention to extend the current exemption to cover communications made by or on behalf of a contracted third-party to an employee subject to a number of conditions, including:
- the communication relates to a group personal pension scheme or stakeholder pension scheme offered to the employee by the employer or the contracted third party;
- the employer will make a contribution to the group personal pension scheme or stakeholder pension scheme in the event of the employee becoming a member of the scheme and the communication contains a statement informing the employee of this; and
- the employer does not receive any direct financial benefit from the scheme.
It is also intended that some further requirements will be covered by guidance, including:
- the employer should be required to take reasonable steps to satisfy himself that the third party administrators are knowledgeable and competent to make the promotion; and
- safeguards, such as the prohibition limiting advice to generic advice, should continue.
However, the proposed amendments do not cover additional areas we suggested in our response to the consultation. For example, we suggested that schemes with their main administration in an EU member state (other than the UK) and life only schemes should be expressly covered by the new rules. We also suggested that it would be helpful to extend the ambit of the exemptions so that it is clear that they apply to communications with, for example, directors and other senior officers, potential employees and employees on leave of absence/secondment.
The summary of responses also does not contain any indication as to when legislative changes might be made.