The financial promotion regime governs how firms market financial products and services in the UK. Its foundation is section 21 of the Financial Services and Markets Act 2000 (FSMA), which makes it a criminal offence to communicate an invitation or inducement to engage in investment activity unless the communicator is an FCA-authorised person, the content has been approved by an authorised person, or an exemption applies. The regime captures a wide range of communications, including adverts, emails, social media posts, brochures and websites, wherever they invite or induce a recipient to invest.
Why financial promotions matter
The overriding standard is that every promotion must be fair, clear and not misleading, a requirement set out in the FCA’s Conduct of Business Sourcebook (COBS 4) and reinforced by the Consumer Duty. Breaches can lead to enforcement action, withdrawal of permissions and, for unapproved promotions, criminal liability under section 21 FSMA. The rules are stricter for high-risk and restricted mass-market investments, where risk warnings, cooling-off periods and appropriateness checks apply.
The approval gateway
The Financial Services and Markets Act 2023 introduced a financial promotion approval gateway: an authorised firm may now only approve promotions for unauthorised persons if it has obtained specific FCA permission to do so. This closed a long-standing gap where any authorised firm could approve third-party promotions. Approving firms must have competence in the relevant product type and keep records demonstrating the promotion met the fair, clear and not misleading standard.
Who it applies to
Banks, investment firms, advisers, fintech and payments firms, and any business communicating or approving promotions for regulated products. Marketing, compliance and senior management teams all carry responsibility.
Related terms
Consumer Duty, conduct risk and SM&CR.