Is my marketing a financial promotion?

What section 21 says

Section 21 of the Financial Services and Markets Act 2000 (FSMA) says a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity. The restriction does not apply if the person communicating is authorised or if an authorised person has approved the content. Communicating an unlawful promotion is a criminal offence under section 25, and agreements that follow from one can be unenforceable under section 30.

The test looks at the communication rather than the business behind it. That is why it can catch a website, a brochure, a webinar, a pitch deck or a short video in the same way.

The elements in plain English

A communication is only caught when each of these elements is present. Each one has its own guidance and grey areas, so the same wording can be caught in one context and not in another.

• An invitation or inducement. An invitation asks someone directly to do something. An inducement is wider and covers material designed to persuade or incite someone towards an investment activity, judged objectively from its content and context. Purely factual material is less likely to count, but adding a call to action or a promotional angle can change that.
• Investment activity. This means entering into an agreement that is a controlled activity, or exercising rights under a controlled investment. Both lists are in Schedule 1 to the Financial Promotion Order. They include shares, bonds, units in funds, deposits, insurance, many forms of credit and, since 8 October 2023, qualifying cryptoassets.
• In the course of business. The communicator usually has a commercial interest in the outcome. A company promoting its own products is acting in the course of business, and so is an affiliate paid by commission or an influencer paid to post. A private individual sharing a personal view is usually in a different position.
• Capable of having an effect in the UK. A communication that originates outside the UK is only caught if it is capable of having an effect here, which websites and social media often are.

The three ways through

A communication that is a financial promotion can still be made lawfully in one of three main ways.

1. The communicator is authorised. An authorised firm can communicate its own promotions, but they must meet the FCA rules on financial promotions, such as COBS 4 for most investments.
2. The content is approved by an authorised firm. Since 7 February 2024 an authorised firm generally needs a specific FCA permission to approve promotions for unauthorised persons, with limited exceptions such as promotions within its own group or of its appointed representatives. How section 21 approval works
3. An exemption applies. The Financial Promotion Order sets out many exemptions, often tied to who receives the communication. Each has conditions that must be met in full. The main exemptions

Outside the perimeter for operations, caught for marketing

The financial promotion test does not ask whether your business needs authorisation for what it does. A business that sits outside the perimeter for its operations can still find that its marketing is caught. Examples include an unregulated company raising money from investors, a lead generator advertising loans on behalf of lenders and an overseas firm whose website reaches UK users.

The reverse also applies. If what you do needs authorisation, having your adverts approved will not fix that. Why the two tests are separate · How the operations test works

Guides in this section

• Section 21 approval →How section 21 approval works, who can approve a promotion and what approvers check.
• Promotion exemptions →The main Financial Promotion Order exemptions and the conditions that come with them.
• Fundraising and investor materials →Why pitch decks, investor emails and crowdfunding pages are often financial promotions.
• Social media and affiliates →How the financial promotion rules apply to social media, finfluencers and affiliates.
• Google and Meta ads →How Google and Meta verify financial advertisers and the main routes for firms without an FCA number.
• Overseas firms →When marketing by a firm based outside the UK is caught by section 21.

When a written opinion helps

The elements above are simple to list and harder to apply. Whether a particular deck or landing page is an inducement, whether the product is a controlled investment and whether an exemption really fits all depend on the detail. A solicitor’s written opinion applies the rules to your actual materials and the way you distribute them. How written opinions work

If your promotions do need approval, we can introduce you to authorised firms that hold the permission to approve them. Those firms pay us an introduction fee.