FCA Financial Promotions: Rules for Small Firms

A financial promotion is any invitation or inducement to engage in investment activity, communicated in the course of business. If your firm is authorised, you may make one. If it is not, section 21 of the Financial Services and Markets Act 2000 is a criminal-liability restriction, not a style guide — section 25(1) of the same Act provides that "A person who contravenes section 21(1) is guilty of an offence", punishable "on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both". Approving someone else's promotion is a different question with a different consequence, and both are covered below.

The core rule reads: "A person ('A') must not, in the course of business, communicate an invitation or inducement to [...] engage in investment activity". The exemption follows immediately: "But subsection (1) does not apply if— (a) A is an authorised person; or (b) the content of the communication is approved for the purposes of this section by an authorised person."

For most small authorised firms, that means the restriction is satisfied by your own authorisation and the real work is compliance with the FCA's promotion rules. Two things complicate it: what you cause others to communicate, and whether you may lawfully approve anyone else's promotion at all. Both are covered below.

What actually counts as a financial promotion

Broader than most firms assume. The FCA's position on format is that it does not matter: "All financial promotions must be clear, fair and not misleading regardless of the media type", and it gives examples of the media in scope — "Financial promotions can take the form of a website, Facebook post, tweet, etc."

The regulator lists the product areas whose advertising it regulates, including:

loans (payday loans, guarantor loans, car finance)
investments (bonds, stocks and shares, contracts for differences, collective investment schemes)
cash savings and bank accounts
insurance (home, motor, travel)
pensions
mortgages
life assurance
payment services and e-money
claims management
qualifying cryptoassets

The boundary that catches small firms is between a promotion and pure image advertising. The FCA points firms at the Perimeter Guidance Manual, which "sets out the legal definition of a financial promotion, and what would be considered merely a communication to reference the firm's brand (image advertising)."

The practical version: a post saying who you are and what you do is likely image advertising. A post that invites the reader to take a step toward a product — book a review, get a quote, see what you could borrow — is likely a promotion, and everything below applies to it.

The clause small firms miss: "communicate" includes causing

Section 21(13) defines the verb: "'Communicate' includes causing a communication to be made."

That single subsection is why the restriction reaches further than your own marketing. If an introducer, a partner firm, an appointed representative or a paid social account puts out material at your instigation, you have caused a communication to be made. The content is your responsibility whether or not you wrote it and whether or not you saw the final version.

For a principal firm this joins directly to the appointed representative regime. The FCA's principals page is explicit about how narrow an introducer appointed representative's permissions are: IARs "can only carry out the following limited activities on behalf of your firm" — "undertaking introductions" and "distributing financial promotions". An IAR is therefore, almost by definition, communicating promotions you are responsible for.

Three practical consequences:

Sign off the material, not the relationship. An agreement saying the introducer will comply is not a control. A copy of what they actually sent is.
Version-control what goes out. "We approved something like this in March" is the position firms find themselves in, and it is not a defensible one.
Include third-party channels in your monitoring. If you never look at what your introducers publish, you have no view of the promotions you are responsible for.

Approving someone else's promotion: the permission you now need

This is the part of the regime that changed most recently, and the part least reflected in older small-firm guidance.

Historically, any authorised firm could approve an unauthorised person's financial promotion. That is no longer the position. Section 21(2A) provides that "The content of a communication may be approved for the purposes of this section by an authorised person only if the giving of the approval— (a) is permitted under section 55NA (which enables approval to be given with FCA permission), or (b) falls within an exemption conferred by regulations under section 55NB."

So approval now depends on holding a specific permission, unless an exemption in regulations applies.

For a small firm the takeaway is short and worth checking rather than assuming: do not approve an unauthorised person's financial promotion on the basis that you are authorised. If a client, an introducer or a connected business asks you to approve their material, the first question is whether your firm holds the relevant permission or falls within an exemption — not whether the content looks fine. Approving without that permission has its own express consequence, and it is a regulatory one rather than a criminal one. Section 55NA(2) provides that an authorised person who approves a communication "otherwise than in accordance with permission granted under this section is to be taken to have contravened a requirement imposed on the person by the FCA under this Act". The criminal offence sits on the other limb of the regime: section 25(1) attaches it to contravening section 21(1) — communicating a promotion when you are neither authorised nor working from an authorised person's approval. Both matter; they are not the same exposure, and it is worth knowing which one you are in.

The standard everything is judged against

"Clear, fair and not misleading" is the phrase to design around, and it is media-neutral. Beyond that, the detailed rules depend on what you are promoting. The FCA maps them by product area:

What you promote	Handbook sourcebook
Consumer credit	CONC (and CONC – Debt)
Retail investments	COBS
General insurance	ICOBS
Mortgages	MCOB
Banking	BCOBS
Claims management	CMCOB

A firm doing both mortgage and investment business is therefore working to two different rule sets on two different promotions, and the sign-off process needs to know which is which. A single generic approval checklist applied to everything is how a firm ends up applying investment rules to a mortgage advert and satisfying neither.

What happens when the FCA finds a problem

The regulator sets out its options plainly. When it finds a financial promotion is misleading it can:

"ask the firm to change or remove the advert"
"ask the firm to write to customers who may have been misled"
"warn or fine the firm"
"ban the promotion"

Note the second one. The remedy that costs a small firm most is rarely the fine — it is writing to everyone who may have been misled, which converts a marketing error into a client-communication exercise with a redress tail behind it.

The FCA also runs a reporting route in the other direction: firms can report another firm's non-compliant promotion through its online form. Separately, complaints about a promotion's "taste and decency, or in relation to its social responsibility" go to the Advertising Standards Authority rather than the FCA.

A sign-off process a small firm can actually run

One named approver. At a small firm this is usually the compliance oversight holder. The point is not seniority, it is that the same person sees everything and notices drift.
Classify before you review. Promotion or image advertising? Which product, and therefore which sourcebook?
Check against the standard, in writing. Clear, fair, not misleading — with the specific risks, costs and comparisons the relevant rules require for that product.
Record the approval with the artefact attached. The approval record is worthless without the exact version it approved.
Set a review date. A promotion that stays up for two years is being communicated for two years; rates, examples and product terms go stale in place.
Cover third-party and social channels explicitly, including anything an introducer or AR distributes on your behalf.
Fold the sample review into your compliance monitoring rather than running it as a separate annual project — see our compliance monitoring plan guide.

How this sits with the conduct rules

Approving a promotion is a conduct-rule act. The FCA's guide for solo-regulated firms sets the first-tier individual conduct rules out in terms — "2. You must act with due care, skill and diligence" and "4. You must pay due regard to the interests of customers and treat them fairly". An approver who signs off material they did not read has a conduct-rules exposure as well as a firm-level one, and at a small firm the approver is frequently a Senior Manager whose Statement of Responsibilities covers exactly this. Our individual conduct rules guide covers the rules, and our Statement of Responsibilities guide covers how responsibility is documented.

Summary

Section 21(1) prohibits communicating, in the course of business, an invitation or inducement to engage in investment activity — unless you are authorised, or an authorised person has approved the content.
"Communicate" includes causing a communication to be made, so material put out by introducers, ARs or paid channels at your instigation is yours.
Approving a third party's promotion now needs its own permission: section 21(2A) allows it only where permitted under section 55NA or exempt under section 55NB regulations. Being authorised is no longer sufficient on its own.
The two limbs carry different consequences. Contravening section 21(1) is a criminal offence under section 25. Approving without a section 55NA permission is, under section 55NA(2), "taken to have contravened a requirement imposed on the person by the FCA under this Act" — a regulatory contravention, not the offence.
Everything must be "clear, fair and not misleading", regardless of media type — website, Facebook post or tweet.
Detailed rules sit by product in CONC, COBS, ICOBS, MCOB, BCOBS and CMCOB.
The FCA's remedies include requiring the firm to write to customers who may have been misled — usually the costliest outcome for a small firm.
Perimeter question first, content second: decide whether it is a promotion or image advertising before you review it.

Last reviewed: 6 October 2026. This guide explains the UK financial promotion restriction and the FCA's promotion rules as they apply to small regulated firms. It is general information, not regulatory or legal advice, and it does not describe a ConductLog product feature — ConductLog is validating demand for a tool that helps small FCA-regulated firms handle conduct and misconduct processes. Contravening section 21(1) is a criminal offence under section 25 of FSMA, and approving a third party's promotion without the section 55NA permission is treated by section 55NA(2) as a contravention of an FCA requirement; for your firm's specific position take professional advice.