ECLIP 1011 DECEMBER 1998

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(No Transcript)
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ECLIP10/11 DECEMBER 1998
FSA GUIDANCE RELEASE ON ADVERTISING OVER THE
INTERNET
John Doran Internet Unit Authorisation Enquiries
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j.doran_at_fsa.gov.uk http//www.fsa.gov.uk
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FSAS STARTING POINT

• Not looking to stifle legitimate commercial use.
• Want to ensure that the potential investor is no
  worse off dealing with a financial services
  company over the Internet than using any other
  medium.
• The internet is another medium to deliver
  financial services.

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THE FSAS VIEWS

• Applicability of the Financial Services Act 1986
• It is possible to carry on investment business,
  as defined in the Financial Services Act, over
  the Internet.
• Any material which constitutes an investment
  advertisement, for the purposes of the Financial
  Services Act which can be brought up on a screen
  in the UK is issued in the UK.

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THE FSAS VIEWS - CONTINUED

• Exemptions and exclusions apply as appropriate.
  Eg paragraphs 26 and 27 of Schedule 1 to the
  Financial Services Act for those without a
  permanent place of business in the UK.

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IMPLICATIONS OF BREACHING THE FINANCIAL SERVICES
ACT 1986

• Unauthorised Investment Business and Advertising
• Criminal offence (2 years or fine or both).
• Investment contracts unenforceable in the UK.
• Open to Court restitution Orders.
• Impact on fitness and properness if UK
  authorisation sought subsequently.
• May impact on fitness and properness to carry on
  investment business in home jurisdiction.

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ENFORCEMENT OF ADVERTISING PROVISIONS OF THE
FINANCIAL SERVICES ACT

• Issues the FSA will consider when deciding
  whether to take enforcement action (June 1996
  letter)
• Risks to investors.
• Other FSA infringements.
• Direction.
• Access controls.
• Warnings and disclaimers.

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FINANCIAL SERVICES AUTHORITY GUIDANCE 2/98
Treatment of material on overseas Internet World
Wide Web sites accessible in the UK but not
intended for investors in the UK.
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FSA GUIDANCE ON FACTORS WHICH WILL BE TAKEN INTO
ACCOUNT WHEN DECIDING WHETHER TO TAKE ENFORCEMENT
ACTION

• Site not located on UK server.
• Underlying investment cannot be purchased by UK
  investors as a matter of fact.
• Underlying investment could be purchased by UK
  investors but the intention is not to sell to UK
  investors and disclaimers/warning to this effect
  exist, with adequate procedures to back this up.
• Steps to limit access to the site.
• Steps to exclude UK investors from taking an
  investment service.

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FACTORS INDICATING WHETHER AN INVESTMENT
ADVERTISING IS DIRECTED AT THE UK

• Disclaimers and warnings.
• The content of the site was not written in a
  manner which appeared to show it was aimed at the
  UK (, UK as listed location, postcodes etc).
• Web site had not been notified to a UK search
  engine or to the UK section of any other search
  engine or site listing.

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FACTORS INDICATING WHETHER AN INVESTMENT
ADVERTISING IS DIRECTED AT THE UK

• E-mail, newsgroups, chat rooms had not been used
  to promote the site in the UK.
• The Web site had not been advertised in the UK
  through a periodical publication which is
  principally for circulation in the UK, or in a
  TV, sound or satellite service which is
  principally for reception in the UK.