Thoughts and Key Information About the FCA's Policy Statement 20/15 (PS20/15)


Written by Tamas Rigo

Written by Andrea Szardics

Written by 

Some property 'professionals' will be blissfully ignorant of the new rules, some scrupulous people will ignore them. As responsible developers and investors, we do welcome the more stringent rules the FCA announced this week which will restrict promotions for SISs ("Speculative illiquid securities" -e.g. investments and returns offered in property development):


These rules aim to prevent (rightly in my opinion) the mass-marketing of SISs and improve disclosure of key risks and costs for retail investors who are still eligible to receive these promotions.


Important for us developers that the PS clearly states (see -Chapter-2, page-11) that promoting our investment offers to the right investors remains legal and allowed by the FCA, i.e. the new PS re-states (see -Chapter-2, page-11), i.e.: "This means that an unauthorised issuer can communicate financial promotions for SISs to certified high net worth individuals, and sophisticated and self-certified sophisticated retail investors without being subject to our rules where the criteria in the exemption are met. However, we consider that these exemptions do not allow issuers to mass-market these promotions to the public, including online."

BTW, Specific exclusion applied for investment in single-company that issue securities to fund ordinary business activity that is not highly speculative, which will remain subject to the rules for marketing NRRSs. "This exemption would continue to be subject to the requirements applicable to the promotion of non-readily realisable securities (NRRSs)... There are, however, limits on what can be a general commercial or industrial purpose in COBS 4.14.25R (2).It excludes investment to generate a pooled return, property development or construction services and hiring, leasing or rental services."

Further exception applied to single-property holding as follows: "As we explained in CP20/8, the single-property holding vehicle exemption is not intended to apply to property development. In addition to the conditions that must be satisfied for a property to be an ‘income generating property’, limb (5) of the definition of ‘property holding vehicle’ limits the activities that an issuer can undertake. This means that the exemption applies where the issuer is only engaged with the holding of income generating property and associated activities, eg the collection of rent. We consider that this already stops an issuer from using this exemption where it plans future development of an existing income generating property. However, we have made some additional amendments to the definition of property holding vehicle to make this even clearer."

The rules will come into force on 1stJanuary 2021.


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